..........In other words, the first priority of the central bank will continue to be inflation. The Urjit Patel committee had set the guideline for the monetary policy easing: Bring down inflation to four per cent, plus or minus two per cent, and then consider lower rates. Rajan summed up the RBI position succinctly: “ … we are not against growth but we do think that the growth will be most benefited if we disinflate the economy and we don’t have to fight this fight again…” Remarkably, the Finance Ministry was quick to endorse the latest policy stance of the central bank. In a statement soon after Rajan confirmed the status quo on rates, the ministry said that it believed that the RBI will not “ hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates…” It had been a long time since we last saw the central bank governor and the finance ministry on the same page. Such harmonious relationship augurs well for the management of the economy, alright..........
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