India's retail inflation is likely to stay above the central bank's tolerance zone of 2 to 6 percent, Deputy Governor Michael Patra said on June 24, in the first public comments on the central bank's impending failure to meet its inflation-fighting objective.
"It is not about failure, it is about credibility of monetary policy which must be preserved," Patra said at a PHD Chamber of Commerce and Industry event in New Delhi. "Monetary policy should be accountable to the public without any escape clauses," he added.
Economic growth is unambiguously impaired when inflation stays above 6 percent, the Deputy Governor stressed. Patra said there are indications that inflation is peaking as monetary policy works through the economy. He said inflation will fall back in the zone in the fourth quarter of 22-23 and fall further next year.
In the world of global inflation crisis it is possibly better to look at change rather than level, the Deputy Governor said. Against this backdrop, it is hoped that required monetary policy action will be more moderate than in the rest of the world, he added.