Will RBI Increase Rates to Combat Inflation? Unlikely, Says Deputy Governor

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Will RBI Increase Rates to Combat Inflation? Unlikely, Says Deputy Governor
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- There is a lot of talk in the markets on how there is too much liquidity, and that the Reserve Bank of India might follow the US Federal Reserve’s line of thought in terms of increasing interest rates.

However, at the Confederation of Indian Industries (CII) on Thursday, September 16, Reserve Bank of India’s Deputy Governor Michael Patra said that the government might be okay with high inflation for the future.

He said, “Taking into account the outlook for growth and inflation and keeping in mind the inherent output costs of disinflation, it is pragmatic to envisage a glide path along which the MPC can steer the path of inflation into the future.”

He added that the panel is tolerating high inflation due to the ‘once-in-a-century’ pandemic, and that it is better to look at inflation as a “glide path rather than crash landing.”

This is very good news for the equity markets because this means that easy money in the system will continue.

Nomura Securities said, “We think Deputy Governor Patra’s comments together with Governor Das’ recent comments send out a clear signal that there is a strong institutional (RBI) consensus that it is too premature for policy normalisation, even though some external MPC members have voiced discomfort over low levels of reverse repo rate and excess liquidity.”

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  • krishna rao @krishna rao
    what is this inflation /deflation when Sensex and Nifty "Party" is going exuburently
    Like 0
    • shailesh mishra @shailesh mishra
      lower interest rates helps in growing the economy as baks gets loans at low rates and it helps in lowering the price of finished goods as well
      Like 0
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  • Cool Trader @Cool Trader
    Hahahaha .... Sooner large class of people in country will be pushed to poverty courtesy higher inflation , no jobs . Govt is insensitive for common man , middle class.
    Like 0
  • akil zariwala @akil zariwala
    Governance is insensitive towards middle class and poor classShould bring down inflation for the people
    Like 1
  • Mohammed Abrar @Mohammed Abrar
    Government saving their own ******not knowing about people..
    Like 0
  • Ajay Uppal @Ajay Uppal
    Govt is recognizing ‘once-in-a-century’ pendemic, but still want poor people to suffer from high inflation.
    Like 1
  • Ajay Uppal @Ajay Uppal
    Govt is ok with high inflation but not the citizen..
    Like 2

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