Stating that "growth is of paramount importance now", the Reserve Bank on Wednesday said it will do whatever it takes to sustain the fledgling recovery by ensuring ample and assured liquidity and cheaper funds to oil the wheels of the economy.
Addressing the media online, Governor Shaktikanta Das said "as of now growth is of paramount importance... And we'll do whatever it takes to help sustain the recovery."
But he was quick to add that "inflation targeting is also important."
"More importantly, the government reiterating the plus-minus 2 per cent of 4 per cent inflation targeting gives us enough policy space to support growth as there are more downside risks to growth on the horizon now than in recent past which make growth...Of paramount importance," he added.
The central bank chose to retain its last forecast of 10.5 per cent GDP growth this fiscal, saying it is "too early to revise its own forecast done two months ago as we have just entered the new fiscal year."
Asked why the thrust was on growth despite pencilling in an upward inflation trajectory (5.2 per cent for the first half and 4.4 per cent for the second), and offering an indefinite period of accommodative policy stance, Das said, "We'll continue to be accommodative till growth becomes sustainable and we will do whatever it takes to achieve that."
Das continued to explain that "inflation is already in a well-entrenched and well-anchored framework now and so is inflation expectation, that's also well-anchored. This is very clear from the fact that the government notification has reiterated the plus-minus 2 per cent of 4 per cent inflation targeting."
"This framework gives RBI enough leeway gives enough policy tools to manage any extraordinary situations like the current pandemic.
"For the time being and at the current juncture, growth is of paramount importance, while of course keeping in mind inflation targeting is also important. After all, the the primary goal of the monetary policy is to maintain a certain level of inflation," he said.
