RBI GUV DEFENDS POLICY DECISION

Finance minister Arun Jaitley by his side after a customary post-budget meeting, RBI governor Urijit Patel told media that the central bank’s policy remains forward-looking rather than “looking at inflation rates of today or yesterday.”

NEW DELHI: The Reserve Bank of India governor Urjit Patel on Saturday defended maintaining tight monetary policy even when retail inflation remained low.

Addressing reporters along with finance minister Arun Jaitley by his side after a customary post-Budget meeting, Patel said the central bank’s monetary policy remains forward looking rather than “looking at inflation rates of today or yesterday.”

“We explained our reasons for decisions that we take and given the monetary policy framework and inflation targeting system that has been followed on account of legislative change. I think that our decisions have been forward looking rather than backward looking,” he said when asked whether RBI has missed the bus to cut interest rates when retail inflation ran low.

RBI on Wednesday kept interest rates unchanged and warned that inflation risks were skewing upwards. The central bank raised its March quarter Consumer Price Index (CPI) inflation forecast to 5.1% and projected an inflation range of 5.1-5.6% in the first half of the next fiscal year.