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Former Reserve Bank of India (RBI) governor Bimal Jalan said on Monday the priority of a central bank should not be fixated on either growth or inflation. He said central banks need to consider national priorities in their policy decisions.
"I will not comment on RBI but I will make a general point on central banks. The whole perception about the role of central banks across the world is changing. If you go back to history, in the 90s there was a predominant view that central banks' responsibility was inflation (control), while the government would decide on fiscal policies, development, growth, etc,” Jalan said at the sidelines of an event.
“Today, if you look around the world, you will find that central banks are very active in promoting growth. For example, what is the US doing?".
RBI had formed a committee headed by one of its deputy governors, Urijit Patel, to review the monetary policy structure.
The Patel committee advised explicit focus on an inflation target, with the retail price inflation figure seen as appropriate in this regard. It suggested RBI try to keep annual inflation around four per cent.
