Inflation is the top priority of the central bank and the MPC will take a decision on further rate action after assessing the inflation scenario, said Shaktikanta Das in an interview with the Economic Times (ET).
"We are assessing the inflation road map. The steps would be factored in. We will give out a revised forecast in the next MPC. Depending on the forecast which we come out with, the MPC will take a decision on further rate action," he told ET.
Das underscored that while the central bank is focussing on inflation containment, it will keep in mind the requirements of growth.
"When I'm talking about growth, it is that I can't forget about the requirements of growth. But our primary focus at the moment is to bring down inflation closer to the target," Das told ET.
"It can't be a situation where the operation is successful and the patient is dead. We will have to bring down inflation and we can't afford such a big growth shock which will adversely affect inflation. It has to be a balanced call with inflation control as a priority, said Das.
Inflation has emerged as one of the biggest worries for policymakers across the globe. In the US, UK and India, inflation is at a multi-year high level. The ongoing Ukraine war, which nobody knows when it will end, has triggered a sharp upswing in crude oil and other commodity prices. Inflation is bad for investors as it eats up their disposable income and hit the companies too by raising their input costs and eroding margins.
The minutes of the last RBI MPC confirmed that the MPC’s inter-meeting hike was compelled by the surprisingly high March inflation outcome, and its reassessment of the inflation outlook - leading it to play policy catch-up, brokerage firm Emkay Global Financial Services highlighted.
Inflation is expected to remain elevated in the next few months also and RBI would want to stay ahead of the curve. The US Fed Chair Jerome Powell has already stated that Federal Reserve will keep raising rates until it brings inflation under control.
But the worry around growth is heightened and economists have been talking about the looming recession.
US weekly jobless claims fell while the first-quarter economic contraction was confirmed as the gross domestic product fell at a 1.5 annualized rate last quarter, the government said in its second GDP estimate. Besides, as reported by Reuters, the number of Americans filing new claims for unemployment benefits fell last week, consistent with a labour market that remains tight amid strong demand for workers despite rising interest rates and tightening financial conditions.
Disclaimer: The article is primarily based on an Economic Times interview. Views are and not of MintGenie.