MUMBAI: RBI governor Sanjay Malhotra has hinted that the central bank may not react to the current bout of inflation and spurt in credit growth. Malhotra struck a notably composed tone, describing price pressures as contained even if “currently a bit elevated”, and attributed the uptick largely to supply-side disturbances.“Inflation is also under control although it is currently a bit elevated…this rise is primarily due to supply-side factors,” he said, adding that “our primary objective is price stability, growth is our secondary objective…these two objectives are not contradictory. They support each other” in a stand that suggests RBI is willing to look through temporary spikes rather than choke off growth.In an interview with Doordarshan News, the governor said that growth remains resilient despite global turbulence, underpinned by domestic demand and investment. Credit is expanding briskly-close to 18% overall-with pockets such as MSMEs and gold loans growing at 24-25%. Yet, unlike the excesses seen in microfinance two years ago, “we do not see immediate distress,” he noted, even as RBI keeps a close watch on fast-growing segments to guard against future slippages.The central bank’s approach to inflation is increasingly granular. “When we talk about headline inflation…we also look closely at its composition,” Malhotra said, noting that CPI, projected at about 5.1% this year, is “slightly above our target” but driven by specific sectors and supply shocks. Policy, he implied, will respond to these underlying drivers rather than the headline number alone.
