EU woes will not alter our stance: RBI

Hawkish monetary policy to continue, says Gokarn
Last Updated : 13 May 2010, 15:53 IST
Last Updated : 13 May 2010, 15:53 IST

Follow Us :


“We do not believe that there is any reason to change our approach. Because it (the Greek crisis) is not showing signs of spilling over to a larger real economy problem,” Gokarn told reporters here.

The apex bank reduced its key rates several times to fight the financial crisis that broke out in end-2008, but started gradually reversing the easy money stance from October last year to contain inflationary pressures in the economy.

Uncertain milieu

“It (the crisis) reflects, obviously, the continuing global uncertain environment, which is a factor we have already built into our exit strategy,” Gokarn, who was earlier an economist with international rating agency Standard and Poor’s, said.

The central bank, however, is keeping a close watch on the developments unfolding in global markets, Gokarn said.

“There are packages in place, there are very serious efforts to contain and not let the crisis to spread to other countries. But we keep a watch on things and see how it pans out,” Gokarn said.  Asian economies have developed their ‘autonomous growth drivers’ and eschewed dependence on western economies, which has enabled them to withstand the impact of financial turmoil and maintain faster growth, Gokarn said.

Fund flows

However, revival in the US and Europe is must for a global economic recovery, as these zones account for a larger chunk of the global GDP, he said.

On capital flows into the domestic market, the Deputy Governor said that fund inflows are likely to gain momentum in the months ahead, as India’s growth is expected to attract more foreign investment.

Gokarn said the central bank is monitoring various forms of inflows and is of the view that equity flows are preferable to debt capital in a healthy economy. Replying to a query, Gokarn said that policymakers will have to wait till end-July to make a proper assessment of the monsoon and its impact on inflation. Wholesale price-based inflation, which stood at 9.9 per cent in March, is expected to cool down in April.

Published 13 May 2010, 15:53 IST

Deccan Herald is on WhatsApp Channels | Join now for Breaking News & Editor's Picks

Follow us on :

Follow Us