Shaktikanta Das, governor of the Reserve Bank of India (RBI), aimed to soothe worries on Wednesday that the Monetary Policy Committee’s explanation to the government on a breach of the inflation target would not be made public. Das claimed that because this was sensitive material, the RBI was not authorized to reveal the contents, but that transparency would not be compromised because the letter’s contents would eventually be made public.
“The government has the first right to receive the letter. Priority should be given to the addressee. It will come out eventually, ideally sooner. Therefore, it cannot be said that transparency is being compromised in any way, said the governor. Das acknowledged that inflation had surpassed the goal range, but he said that raising rates too soon would have had negative effects on households as well as the economy. By keeping rates low and avoiding premature tightening, the central bank was attempting to avoid a “total collapse of the economy,” Das added.
The central bank is obligated to explain the breach to the government and provide a schedule for when the price increase would be stopped when inflation stayed above 6% for three consecutive quarters. In addition, Das urged a cool-headed response to the rupee’s decline, noting that it had acted in an orderly manner.
As soon as all technical and administrative hiccups have been resolved, the RBI will deploy the central bank digital currency (CBDC) on its whole. We aim to “smooth out all those features” and introduce it so that the subsequent introduction process won’t be disruptive, according to Das. The governor said that the CBDC pilot’s retail phase would begin later this month.