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Central bank targeting inflation over medium term: RBI Governor

29 Dec 2014 Evaluate

Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that central bank would like to focus on medium-term inflation target and will not chase the short-term goals. Highlighting that  no country in the world chases short-term inflation target ignoring domestic and global developments, Raghuram Rajan emphasized that medium term inflation target provide room for the economy to adjust in accordance with the changes that are happening.

The RBI targets to contain the CPI inflation at 8 per cent by March 2015 and 6% by March 2016. Keeping inflation battle at the top of agenda, the RBI has kept interest rate unchanged at 8% since January 2014 despite industry and government urging it to cut the rate. Meanwhile, CPI inflation eased to 4.38% in November as compared to 5.52% in the previous month and WPI inflation declined to five and half year low at 0%. On the other hand, Indian GDP growth slowed down to 5.3% y-o-y to Rs 14.39 lakh crore in Q2FY15 as against 5.7% in the previous quarter mainly due to sluggish investment and low demand.

On economic growth the RBI governor has stated that though the country is still not on strong recovery path, India will soon return to high economic growth in next couple of years. Attributing the surge in trade deficit to high gold imports, he stated that gold imports during the past few months surged due to relaxation of import norms, however the things would return to normal soon with the fall in gold imports.

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