Indo-Asian News Service
Washington, August 30: Reserve Bank of India (RBI) governor Raghuram Rajan says he is trying to bring down India’s high inflation rate while navigating complications like manufacturers who are hurt by higher interest rates and a stronger currency. RBI’s policy process, among other things, involves “trying to take the heat away from the political economy and put it on frameworks, technical models, projections”, he said at the Federal Reserve Bank of Kansas City’s annual economic symposium Saturday. “What we’re doing is disinflation without worrying too much about distribution,” he said. “To some extent, that framework allows us protection,” Rajan was quoted as saying at the conference in Jackson Hole, Wyoming, by the Wall Street Journal. The role of politics and history was a little-discussed but important force in determining the goals and tactics of economic policy makers, he said, speaking on a panel about global inflation dynamics. For instance, when it comes to modern central banks’ focus on targeting inflation, “which side of the inflation band is emphasised stems from history and political economy”, Rajan said. He said some have argued the US focus on the costs of low inflation or deflation reflects in part from the business bankruptcies in the 1920s and 1930s.
