More policy space can be created only when inflation eases, says MPC member

Inflation is being driven by supply-side problems and is likely to stay elevated for a while, Mridul Saggar said

The Reserve Bank of India has cut interest rates by “a great deal” and more policy space can be created only when inflation eases, its executive director and rate-panel member Mridul Saggar said.

Inflation is being driven by supply-side problems and is likely to stay elevated for a while, he said at the Emerging Markets Central Banking Summit organized virtually by the Washington-based Institute of International Finance. Although food prices -- which contribute significantly to India’s inflation basket -- are expected to correct significantly by December, he said it isn’t easy to bring prices down under pandemic conditions.

His comments come days