monetary policy: Hopeful monetary actions needed are moderate vs peers: RBI deputy governor Michael Patra

The Reserve Bank of India is hopeful that required monetary policy actions will be more moderate than in the rest of the world and there are indications that inflation is peaking, deputy governor Michael Patra said in a speech on Friday.

Patra said internal research has showed that growth is unambiguously impaired when inflation exceeds 6% and with core measures of inflation showing signs of generalisation, monetary action is certainly warranted.

Patra was speaking at an event organised by the PHD Chamber of Commerce and Industry.

RBI will not allow ‘jerky movements’ of Rupee

Patra said the central bank will not allow “jerky movements” of Rupee and stressed that the Indian currency has witnessed least depreciation in recent times. Addressing an interactive session on ‘Geo-Political Spillovers and Indian Economy’, he attributed the lesser depreciation of Rupee to high foreign exchange reserves of around $600 billion.

“We will stand for its stability, and we’re doing it on an ongoing basis even as I speak. We are there in the market. We will not allow disorderly movements. We have no level in our mind, but we will not allow jerky movements that is for certain and let it be widely known that we are in the market defending the rupee against volatility,” he said..

Patra further said if one looks at the depreciation of Rupee, it is one of the least in the world and that is the power of $600 billion dollar reserves. On Thursday, Rupee had closed at its all-time low of 78.32 against the US dollar. However, in the morning session on Friday it opened 12 paise up at 78.20 against the US dollar.