Price stability is in the best interest of the people and the economy and is the foundation for sustainable growth, Reserve Bank of India (RBI) Governor Shaktikanta Das said in his speech at the conference high-level policy of the central banks of the South. which was held here today.

“Resilient growth has given us the opportunity to focus on inflation and ensure its sustained divergence from the 4 percent target. Stable inflation or price stability is in the best interest of the people and the economy. It provides the foundation for sustainable growth, improves the purchasing power of the people and provides a stable environment for investment,” Das said.

His comments come at a time when India’s retail inflation, as measured by the Consumer Price Index (CPI), hit a 14-month high of 6.21 in October. hundred. Retail inflation was above the RBI’s 2-6 percent tolerance band. Despite higher inflation, central government leaders have called on the RBI to cut interest rates. The RBI, in its last Monetary Policy Committee (MPC) meeting, had left the repo rate unchanged at 6.5 per cent, but changed its stance from ‘withdrawal of accommodative measures’ to ‘neutral’, thereby mitigating the cycle of political tightening.

Global South

Das said countries in the South need to increase their per capita income and productivity, for which growth is a fundamental necessity. However, growth must not come at the expense of price stability.

“To achieve higher growth, countries in the South need to increase investments in physical and social infrastructure, leverage technology and innovations, and carry out institutional reforms. All this requires appropriate public policies, including monetary policies, that support growth while maintaining balance with inflation,” he said.

In fact, price stability is just as crucial as growth in enabling economic agents to plan, reduce the inflationary risk premium and encourage savings and investment. “Price stability is also important because high inflation disproportionately burdens the poor,” he said. The role of fiscal and monetary coordination is also essential to maintain the balance between growth and inflation.

A difficult time for the global economy

The governor also said that clouds of uncertainties still loomed on the horizon and policymaking under such conditions would be a difficult task.

“When the history of our times is written, the experiences and learnings of recent years will in all likelihood constitute a turning point in the evolution of central banks,” he said. For countries in the South, maintaining overall stability, including sustained growth, price stability and financial stability, remains a significant challenge.

Accordingly, central banks must work towards establishing more robust, realistic and agile policy frameworks, synergistically using monetary, prudential, fiscal and structural policies to achieve the desired outcomes, Das said.