No Differences With FinMin On Growth: Rajan
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Under flak from various quarters for raising rates, RBI Governor Raghuram Rajan said on Wednesday (26 February) the central bank is committed to the "strongest growth possible" and stressed it is on the same page as the Finance Ministry on this front.
"Note that the RBI is committed to getting the strongest growth possible; there is no difference between us and North Block on this," said Rajan, who has hiked rates thrice since taking over as Governor in September.
He was speaking at a fixed income industry (Fimmda-PDAI) event here where the media was not allowed and only given a copy of the speech.
North Block, which houses the Ministry of Finance, has not been pleased with the Reserve Bank's rate increases, given their impact on investor sentiment and growth in general.
Rajan justified his actions, saying the best way to foster sustainable growth in the current circumstances is through monetary stability, which is bringing down inflation over a reasonable period of time.
The Governor, who went against the majority view of an internal panel advising on the monetary policy and surprised all by hiking rates in January, also reiterated the central bank's determination to get retail inflation down to 8 per cent by January 2015 and 6 per cent by January 2016.
He explained that even though some people may believe that in the short-run, the RBI's rate hikes may impact growth, the best way for a central bank to generate growth is to bring down inflation.
"Sooner or later, the public always understands what the central bank is doing, whether for the good or for the bad," he said.