RBI to continue soft monetary policy

Seeking to allay apprehensions that the Reserve Bank of India (RBI) may soon revert to tight money policy to tackle the upward movement of inflation expected in the coming months, RBI Governor D. Subbarao on Tuesday maintained that the current soft monetary policy approach adopted as a measure to combat the fall-out of the global financial crisis would continue until the economy is securely on the growth track.
At the same time, setting timelines for an eventual reversal of the expansionist monetary policy which had been put in place to tackle the economic slowdown and spurring growth, Dr. Subbarao said: “Especially on monetary policy, we [the RBI] will not exit unless we are sure that recovery is secured...but soon thereafter, when we make the judgement that the recovery is secured, we have to unwind the accommodative monetary policy”.
The RBI Governor, however, pointed out that the government and the apex bank would have to then take a call on the timing of withdrawing the stimulus measures which had been injected to perk up the slowing economy. And this, he said, would be sooner than in most of the other countries.