Striking a hawkish tone, Reserve Bank of India’s governor, Raghuram Rajan underscored that India’s central bank still long way to go in fighting inflation and that the bank had a credibility to control inflation if it picks up.
The governor further appeared shaky on the aspect of winning over inflation and highlighted that the country in true sense would win the war over reining inflation, if it could survive upon the supply shock in the future, if they wouldn’t increase inflation expectation.
Rajan`s words of caution come a few days after the RBI held interest rates steady in its latest policy review after a surprise rate cut in mid-January. Further, the governor also stressed on the need for the country to accelerate growth, citing that India should not settle for 'anything less than double-digit growth' in the medium term.
Lastly, he emphasized that India was importing 'disinflationary conditions' from the rest of the world, helping contain domestic inflation, but he warned that countries were required to be mindful of 'an exchange rate that was too strong and not competitive.