Mumbai: The RBI’s monetary policy committee members had considered the action to be taken in case the situation in Europe leads to an increase in oil prices. Minutes of the monetary policy committee (MPC) meeting held on February 9 released on Thursday reveal that the central bank’s policy action would be required in case energy prices rose.
“Uncertainties about energy prices have risen considerably. Indian crude oil basket is up nearly 25% in the previous two months. The current geopolitical stress in Europe is a significant risk and if it translates into oil and gas prices spiking, we will need to adjust macro-economic policies suitably,” RBI deputy governor Mridul Saggar said, according to the minutes of the MPC meeting.
According to Saggar, the higher level of foreign exchange reserves meant that India has turned less sensitive to global factors. “However, it will be important to maintain credibility by aiming to keep inflation on a sustained basis at or near the target as soon as real economy conditions normalise,” he said.
