Raghuram Rajan defends record, inflation fight

Reuters: Reserve Bank of India Chief Raghuram Rajan on Monday defended his record in fighting inflation and made a case for monetary policy reforms he has championed, in his first public appearance since announcing he will step down at the end of his tenure in September.

In a speech, RBI Governor addressed critics who have accused him of keeping interest rates too high, saying they cannot “have it both ways, want lower inflation as well as lower policy rates.”

“The fact that inflation is fairly close to the upper bound of our target zone today suggests we have not been overly hawkish, and were wise to disregard advice in the past to cut more deeply,” Rajan said. Consumer inflation hit a near two-year high of 5.76% in May, or the upper end of the central bank’s inflation target of 2% to 6%.

Rajan also strongly defended the upcoming introduction of a monetary policy panel to set interest rates – a policy he has championed – saying “the rewards will be many,” including a more stable policy framework.