Jayanth Varma, member, Reserve Bank of India’s (RBI’s) monetary policy committee (MPC), in an email interview with Manojit Saha, says cooling commodity prices auger well for inflation in the medium term.
System liquidity was in huge surplus but has turned into deficit following the incremental cash reserve ratio (I-CRR) norms. Is it prudent to maintain tight liquidity during the festival season as it could hurt growth?
Liquidity management does not lie within the purview of the MPC as it is merely a part of the operational toolkit for implementing the monetary policy. I would not like to comment on this.