MUMBAI: India’s monetary policy can look through temporary supply shocks but may intervene if inflation pressures become entrenched following the Iran war-driven oil price spike, central bank Governor Sanjay Malhotra said.
Malhotra was speaking at a conference in Switzerland late on Tuesday. Some of his comments are below:
The government may need to hike fuel prices if the conflict in the Middle East drags on.
The government has followed fiscally prudent policies so it is “only a matter of time” before higher oil prices are passed on more fully.
Important for fiscal and monetary policy to coordinate at this time.
Indian central bank likely selling dollars to limit Indian rupee’s slide, traders say
At its April monetary policy review, RBI decided to wait and watch. It was “early days” then. Monetary policy will need to remain nimble and flexible.
Central banks need to be cautious, follow a policy of “gradualism” in the face of heightened uncertainty.
RBI is being more and more data-dependent, taking it meeting by meeting.