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The RBI is unconcerned with transitory inflation, according to an ex-deputy RBI governor

According to one of the Reserve Bank of India's ex-deputy governors, the current bout of rising inflation is being driven by supply-side restrictions that will likely disappear once the economy reopens. That is why the RBI is unconcerned about an imminent spike in inflation rates," R. Gandhi, who served as the central bank's deputy governor between 2014 and 2017, told Bloomberg TV's Rishaad Salamat and Haslinda Amin.

Despite the fact that retail inflation has been well above the central bank's maximum tolerance range of 6% for the previous two months, Governor Shaktikanta Das recently termed the pattern as a "transitory hump." His remarks emphasised the monetary authority's intention to maintain borrowing prices low for a longer period of time to aid the economy's recovery from an extraordinary downturn last fiscal year. Nonetheless, bond traders see rising inflation, a near-record government borrowing programme, and higher oil prices as indicators of monetary policy tightening sooner than planned. The benchmark 10-year government bond yield has risen by 16 basis points this month to 6.21 percent, the most since February. It appears to me to be a normal conflict between market players and the monetary policy authority." Gandhi stated, “There is no need to be alarmed." He stated that the RBI and the Monetary Policy Committee anticipate that the government's borrowing programme would go smoothly and without disrupting the yield curve.

"The RBI backs up its ideas by words and deeds, including devolvement's at bond auctions, which send a powerful message", R. Gandhi remarked.

The ex-deputy governor further said, "because of idle capacity and limited credit growth, the economy is unlikely to overheat."

He told, "the recent increase in oil prices is cause for concern, but the impact on inflation should be manageable."

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