JAYANTH VARMA is the only member on the Monetary Policy Committee (MPC) that voted against the continuation of the Accommodation Posture in the August Round of the Monetary Policy review. Except Varma, all the other five members voted in favor of continuing with the accommodation position “as long as it is necessary to” revive and maintain growth and continue to mitigating the impact of Covid-19 in the economy, while ensuring that inflation remains inside Of the objective. .
According to the minutes of monetary policy published on August 20, Varma said at a time when economic recovery is still rising, it is extremely important that monetary policy serves as an anchor of macroeconomic stability. By creating the erroneous perception that the MPC is no longer concerned about inflation and is focused exclusively on growth, the MPC may be inadvertently aggravating the risk of inflationary expectations recovered. In this scenario, the increase in risk award could cause long-term rates to increase, Varma said.
In an interview with MoneyControl, Varma spoke about the opinions on MPC’s posture, on inflation and disagreement within MPC on inflation forecasts. Extracts edited:
You have questioned the wealthy posture and the nature of forward orientation in MPC meets. Do you think your arguments have been received with the desired seriousness in the panel?
In my experience, the MPC treats the opinions of all members with total seriousness and respect. I think a certain degree of opinion difference is healthy and leads to better long-term decision-making.
