Outgoing governor of Reserve Bank of India Raghuram Rajan said on Friday that he has no doubt that inflation, which has crossed the 6 per cent mark in July, will fall in the coming months.
“We finally have a framework that commits us to low and stable inflation. Yes, July’s inflation reading was a high 6.07%, but I have no doubt that inflation will fall in the months ahead,” Mr Rajan said in a speech at annual day address of the Foreign Exchange Dealers Association of India (FEDAI).
Consumer price index-based inflation rose at a faster-than-expected pace to 6.07 per cent in July, mainly driven by food prices, as compared to up 5.77 per cent in June, higher than the central bank’s March end target of 5 per cent. RBI had kept interest rates unchanged in the August policy due to high inflation.
“The key point is that market participants know that the Monetary Policy Committee has to maintain low and stable inflation, certainly over the next five years for which its remit has been set, and it will do what it takes,” the outgoing governor, who demits office in early September said.
The government is in the process of finalizing a monetary policy committee which will set interest rates, most likely from the October policy review.
Mr Rajan also said he is confident, that Urjit Patel, one of his re deputies who will succeed him, will achieve inflation target.
“I am confident that Dr. Urjit Patel, who has worked closely with me on monetary policy for the last three years, will ably guide the Monetary Policy Committee going forward in achieving our inflation objectives,” he said.
