November 30, 2022
RBI Gets Praised By The IMF For Tightening Monetary Policy: Combat Inflation

RBI Gets Praised By The IMF For Tightening Monetary Policy: Combat Inflation

On Tuesday, India’s central bank, the Reserve Bank of India, or RBI, was commended by the United Nation’s major financial agency, the International Monetary Fund, or IMF, for tightening India’s monetary policy to control the country’s inflation.

Antonio Garcia Pascual, who is the Deputy Chief of the Global Market Analysis Division at the International Monetary Fund (IMF), made a statement saying that since May, the Reserve Bank of India (RBI) has to a certain degree, delivered 190 BPS rate hikes, which they believe is necessary to bring inflation to the target point. The central bank has been adequately tightening to combat inflation since it exceeds the target.

Tobias Adrian, the Financial Counselor and Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF), said India’s monetary policy had been tightened, the same as other emerging countries when inflation exceeded the target. Additionally, the latest inflation has exceeded the Reserve Bank of India’s (RBI) target, therefore anticipating tighter monetary policy in the time to come.

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Tobias Adrian further stated that there are a few vulnerabilities or weaknesses in the Indian banking and non-banking systems that have pre-existed and are undoubtedly still present and are worrying about the country’s financial stability. A few of these problems still exist in India even though they have already been identified in the Financial Sector Assessment Programme (FSAP) conducted in the country.

According to Antonio Garcia Pascual, problems with financial stability have existed for a long time, affecting banking and non-banking institutions. He believes that the banking side concerns with responsible underwriting standards to have sufficient and build additional capital. Therefore, problem loans must be made aware since they may become a burden. They are the primary concerns because they may hinder future lending and the banking system’s revival if they are kept on the balance sheet.

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