Tuesday, June 21, 2016

Rajan urges India to ‘stay the course’ on inflation

India’s outgoing central bank governor Raghuram Rajan urged his successor on Monday to “stay the course” on pushing down inflation, in his first comments since he announced he was stepping down.

The popular Reserve Bank of India chief said in a statement released on Saturday he would be returning to academia when his term as RBI governor finishes in September, ending months of intense speculation over his future.

Rajan, who famously predicted the 2008 global financial crisis, has been widely credited with bringing stability to India's economy since taking over the reins of the RBI in September 2013.

He has brought inflation down from double-digit levels to 5.8% currently, and on Monday urged the RBI and India's government to continue to focus on keeping it under control.

“We must not get diverted as we build the institutions necessary to secure a low-inflation future, especially because we seem to be making headway,” Rajan said during a speech in Mumbai.

“The government has taken the momentous step of both setting a CPI-based inflation objective for the RBI as well as a framework for setting up an independent monetary policy committee.

“In the days ahead a new governor as well as the members of the committee will be picked. I am sure they will internalise the frameworks and institutions that have been set up, and should produce a low inflation future for India,” he added.

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