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RBI not 'behind the curve' in hiking rate; never wise to overreact to shocks: Ashima Goyal

RBI not 'behind the curve' in hiking rate; never wise to overreact to shocks: Ashima Goyal

RBI not 'behind the curve' in hiking rate; never wise to overreact to shocks: Ashima Goyal
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By PTI May 15, 2022 11:33:28 AM IST (Updated)

RBI MPC member Ashima Goyal, while acknowledging that India is "especially vulnerable" to the combination of food and crude oil inflation unleashed by the Russia-Ukraine war, said that the central bank is not "behind the curve" in hiking interest rates. She asserted that it is never wise to overreact to shocks when the economic recovery is shaky.

The Reserve Bank of India is not "behind the curve" in hiking interest rates to tackle rising inflation, Monetary Policy Committee (MPC) member Ashima Goyal said on Sunday. She asserted that it is never wise to overreact to shocks when the economic recovery is shaky post the coronavirus pandemic.

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While acknowledging that India is "especially vulnerable" to the combination of food and crude oil inflation unleashed by the Russia-Ukraine war, Goyal, also an eminent economist, said rate hikes should be aligned with the economic recovery.
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Her comments come days after the MPC, the central bank's rate-setting panel, surprised the markets with a 40 basis points hike in repo rate in an off-cycle policy meeting this month. It was also the first rate hike after August 2018, amid spiralling inflation.
"RBI started rebalancing liquidity last year, while the US Federal Reserve is yet to start contracting its balance sheet, with inflation far in excess of its target," she told.
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