The Reserve Bank of India is expected to further tighten its monetary policy during its April 20 policy review to control shooting inflation, according to financial Services secretary R Gopalan.
Gopalan said, “I share the view of some experts that some further amount of tightening is required”.
The central bank is examining its monetary policy on April 20 and is broadly anticipated to further increase its major rates and/or ratio to tame increasing inflation.
The total inflation, according to wholesale prices, has gone up to 9.89% in February, far beyond the expected of 8.50% that the RBI had anticipated for March-end.
The finance ministry official supported his opinion by saying, “Inflation will certainly be an issue which the RBI will take into account”.
In January, RBI had increased the cash reserve ratio, by 75 basis points to 5.75%.
It was succeeded by one more round of rate hikes in March when RBI increased its repo and reverse repo rates by 25 basis points each to 5% and 3.5%, respectively.
When asked about the type of instrument, RBI is expected to use to tighten its monetary policy further, Gopalan said, “What instruments they will use, it is for them to decide.”