Mumbai: Changed economic environment, both domestically and globally, has prompted the Reserve Bank to scale up its monetary intervention though there has not been any material change in the domestic economy since the last monetary action, a top central banker said.
“Given the change in economy situations, all central banks (of other countries) have stepped up their monetary activities...We (RBI) have also stepped up our monitoring ...there is a need to constantly monitor the developments,” RBI Deputy Governor Rakesh Mohan told a seminar.
Later, speaking to reporters on the sidelines, Mohan said that there was no change in domestic economy conditions since the last monetary action.
“There is no material change in the financial conditions (after 24 June),” Mohan said.
With a view to arrest the runaway inflation, the apex bank had hiked both its repo and cash reserve ratio rates by 0.50%.
India’s inflation was hovering at a 13-year high of 11.42% for the week ended June 14, 2008 as against 11.05% in the previous week.
As the country’s economy opened up and also because of the global market conditions, there was a need to constantly monitor economic developments, the Deputy Governor said.
“Policy actions that will have an impact on interest rates will work only if other segments like the labour and capital markets operate well...timely availability of data and right understanding of indicators like inflation are needed for that,” Mohan said.
The apex bank has set up a technical advisory committee to assess the “true meaning of inflation” and its impact on various segments of the economy, Mohan said.
Besides, the committee would also examine the means to reduce the lag in inflation data, he added.
The central bank is also working to enhance data collection from the housing sector which is emerging as a key component of the global economies, he said.
The Deputy Governor said that the primary goal of monetary policy continued to be financial stability in the domestic economy and maintaining the growth momentum.