Key Points
The Monetary Policy Committee needs to give more importance to core inflation as this component of the consumer price gauge has the largest impact on household inflation expectations over the long term, Ashima Goyal, a member of the Reserve Bank of India's rate-setting panel, told Bhaskar Dutta in an interview..
Goyal, whose term at the MPC ends in early October, said the panel's ambit should be widened to provide guidance on liquidity conditions in the banking system..
Your term at the MPC has seen an unprecedented combination of shocks..
Research shows that in India, causality is from core to headline, and in the longer term, core has the largest impact on household inflation expectations..
Yes, the social contract that has delivered in the post-pandemic period is for the MPC to hold the real repo rate at the minimum level that anchors inflation expectations, even as the government acts to lower inflation from the supply side..
