India's growth to be above 6% with strong macroeconomic stability, inflation to decline: RBI MPC member Ashima Goyal
speaking on inflation and when it will come down, Ashima Goyal said, "For a long time now, firms' inflation expectations have been around 4 percent. That means, despite cost shocks, their price increases do not exceed 4 percent." Ashima Goyal stressed that core inflation is softening and the strategy of inflation targeting is teaching those who determine prices to disregard temporary disruptions in the supply chain.
India's retail inflation declined to 6.83% in August from the 15-month high of 7.44% in July. The MPC member added that in the face of recurring supply shocks, such as those arising from events like the Russia-Ukraine war, the adjustment of monetary policy should be sufficient to stabilize inflation expectations.
However, it should be done in a manner that doesn't excessively hinder economic growth. "But other supply-side policies will continue to reduce inflation," she opined.
Ashima Goyal also addressed the recent rise in oil prices in the international market which breached the $90 per barrel mark for the first time in 10 months and said that the government and oil companies have built up counter-cyclical buffers by not passing a fall in international oil prices. She noted that the hike in international oil prices is also pushing countries to diversify away from oil.
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