RBI’s Monetary Policy Committee member Varma diverged from policy stance

Subject – Economy

Context – RBI’s Monetary Policy Committee member Varma diverged from policy stance, called for tightening

Concept –

While the Reserve Bank’s Monetary Policy Committee (MPC) retained the accommodative stance and kept the main policy rates unchanged in the review earlier this month, Jayanth R Varma, a member of the MPC, has strongly argued for tightening the policy stating that inflation and growth risks are “well beyond the control” of the MPC.
“Since August, I have become increasingly concerned about two other risks that have become salient globally in recent weeks. The first is that the ongoing transition to green energy worldwide poses a significant risk of creating a series of energy price shocks similar to that in the 1970s. This means that the upside risks to long term inflation and to inflation expectations are now more aggravated,” Varma said proposing a hike in reverse repo rate.
- “I am not in favour of the decision to keep the reverse repo rate at 3.35 per cent, and vote against the accommodative stance,” Varma said.

To know about MPC and accommodative stance, please click here.