India’s RBI Will Ensure A Soft Landing For Economy, Das Says

(Bloomberg) -- Indian central bank’s transition to a tighter monetary policy from an ultra-loose phase will be smooth and there won’t be any disruptions, Governor Shaktikanta Das said on Friday.

“We are targeting a soft landing,” Das said at a conference organized by The Financial Express, adding that the Reserve Bank of India is in sync with the requirements of the Indian economy. 

The process of coming out of easy liquidity system takes long time due to factors partly beyond the RBI’s control, Das said. 

India’s central bank raised rates by 90 basis points this year to tame prices that have run above its 6% tolerance limit since the beginning of the year. Consumer prices rose to 7.04% in May, while wholesale prices gained 15.88% the same month, staying at the highest level in more than three decades. 

The tolerance of a higher inflation during the pandemic was a necessity, Das said, otherwise, the damage to the economy and financial markets would have been enormous and it would have taken years for India to come back.

Central banks across the globe have begun weighing their options, seeking a balance between growth-inflation dynamics and a restless bond market after the Federal Reserve’s super-sized rate hike this week.

“RBI has not fallen behind the curve, we have been in line with the requirements of our time”, Governor Das said.

Here’s more from Das: 

• Big techs also pose concerns on data sharing and can materialize in sectors other than financial system
• Big tech has enormous amount of customer data; banks are using data by fintech companies for their credit assessment, which can create systemic concerns
• RBI will address issues about regulated entities very seriously
• There’s case for a globally coordinated regulatory approach to mitigate risk in the case of blockchain technology-based products

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