Tokyo: Reserve Bank of India (RBI) governor Yaga Venugopal Reddy expressed confidence that the central bank would be able to slow inflation down closer to 3% well before the time frame of its mid-term inflation goal of 4-4.5%.
“Well before the medium term, we should be able to bring it closer to 3%,” Reddy said in a panel discussion on 28 May at a symposium in Tokyo on India’s economy. Speaking at the same seminar, Bank of Japan governor Toshihiko Fukui said he saw signs of increasing inflationary pressure in India.
But, even as he urged India to remove curbs on capital flows and develop the bond market to integrate itself into the global economy, Fukui predicted India’s economy will overtake the Japanese economy by 2025 to rank third in the world after the United States and China in terms of purchasing power parity, adds AFP.
Asked why RBI, unlike other central banks, has been using wholesale prices, rather than consumer prices, in guiding monetary policy, Reddy said RBI should ideally use the consumer price index as the target for monetary policy.
But he explained that the central bank has been unable to do so because India does not have a single CPI that covers a broad range of industries.