RBI has surged ahead of curve: Deputy Governor Michael Patra

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The Reserve Bank of India has surged ahead of the curve with its recent monetary tightening, deputy governor Michael Patra said on June 24.

"RBI's action will prevent the second round effects from food and fuel from spreading," Patra said at a PHD Chamber of Commerce and Industry event in New Delhi.

"This is the best time to put the stabilising effects of monetary policy into action."

India's pandemic-hit economy, which is expected to grow 7.2 percent in the current financial year, faces headwinds from global geopolitical turmoil, deglobalisation, and surge in commodities and crude oil prices.

The RBI's rate-setting panel has since early May raised the policy repo rate by 90 basis points to 4.90 percent as it seeks to curb elevated inflation which could also threaten economic recovery.

The RBI waited before hiking rates because it wanted to be sure that the economy could take it.

Globally, central banks have moved at an unprecedented pace to control the cost of living crisis. The RBI is expected to hike again.

Back home, prime minister Narendra Modi's administration has been pushing domestic manufacturing through production-linked incentives as it seeks to build self-reliance in key and emerging sectors.

However, recently the government has also curbed outbound shipments of wheat.