'Inflation can't be fought with textbook approaches'

The Reserve Bank needs to go beyond the textbook approach of hiking rates to fight inflation, ICICI Bank Chairman K V Kamath has said.

“Inflation needs innovative solutions. We need to move away from the older methods to curb inflation,” he said at a speech on the current economic environment organised by industry body IMC at the University of Mumbai premises on Friday.

Wondering whether the “textbook prescriptions” are relevant today, he said those principles were laid down at a very different time, especially when markets were not as open as they are today.

Raghuram Rajan took charge as RBI Governor last week. His predecessor D Subbarao had ushered in a series of rate hikes to tame the runaway inflation after the massive stimulus unveiled following the 2008 global credit crisis. Subbarao faced criticism from industry, amongst others, for the hikes.

The RBI on Thursday notified a nine-member committee to have a fresh look at the monetary policy-making.

Speaking on the troubles over the rupee, Kamath said the currency is undervalued at present, but did not give an indicative number of the right level.