Monetary Policy Committee (MPC) member, Ashima Goyal in an interview to NewsRise stated that MPC will wait and watch the inflation trajectory and observe if the spike persists.
This statement is important for two reasons – the MPC is speaking after an important inflation data and they don’t normally speak.
The big sentence coming from her is that the MPC will wait to see if inflation persists and they will not decide on rates just by one inflation data point which has come at the peak of COVID 2.0.
She has also pointed out that as growth is deeply hurt, it would be wrong to tinker with rates at such a time.
Inflation is driven by supply-side disruptions currently and it is not a demand-side issue and therefore the MPC cannot afford to tighten simply because you want to reach 4 percent.
Watch the accompanying video of CNBC-TV18’s Latha Venkatesh for more details.
(Edited by : Abhishek Jha)
First Published: IST