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Inflation volatility is a challenge: RBI Governor
Why is it in the news ?
- Amid a growing demand for a reduction in interest rate in the upcoming monetary policy review, RBI Governor said wide divergences and volatility in inflation pose challenges for its assessment.
- RBI governor was speaking at an investor roundtable on the first day of Vibrant Gujarat 2019 summit.
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What all the Governor said:
- Although headline inflation has moderated significantly in recent years, its major components inflation in food, fuel, and inflation excluding food and fuel are exhibiting wide divergences this year.
- There is a sharp fall in retail inflation in recent months with the latest data showing December CPI inflation at 2.2%.
- Balancing the objectives of inflation and growth under a flexible inflation targeting framework would warrant careful analysis of every new data.
- On the external front, the Governor said a close monitoring of external sector was required.
- Governor also acknowledged that easing of global crude oil prices augured well for inflation outcomes.
- On the banking sector, the Governor reiterated that NPA ratio of the banks could further come down to 10.3% in March 2019 compared with 10.8% in September 2018.
- The Governor, however, pointed out that the area where policy action is required is corporate governance in banks with a focus on transparency and accountability.
- He also described cyber risk as a major challenge and a comprehensive cyber risk and resilience policies and diligent implementation is critical.
Source
The Hindu.