RBI Governor Urjit Patel on saturday said the monetary policy decisions need to be “forward- looking” and cannot be taken on the basis of day-to-day inflation rates.
Stating that it is difficult to predict global oil prices, Patel said the global charts have shown two-way movement in the recent days and there is a need to be prepared for both the scenarios of rising and falling rates.
Speaking to reporters after Finance Minister Arun Jaitley’s customary post-Budget address to RBI’s board, the governor also exuded confidence about improving credit growth and the encouraging trend of companies being able to raise a fair amount of funds from the capital markets.
On the monetary policy framework, Patel said the Monetary Policy Committee (MPC), which decided to keep the key rates unchanged earlier this week, has explained its reasons for the decisions it takes as per the policy framework and the inflation targeting system that has been followed on account of legislative change.
“We have to be forward-looking when conducting monetary policy rather than looking at inflation rates today or yesterday.