The Hindu Business Line : ‘Global outlook more uncertain now’

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‘Global outlook more uncertain now’

Dr Y.V. Reddy

Our Bureau

Mumbai, Jan. 21 The US sub-prime crisis and global financial uncertainties seem to list high on the RBI Governor, Dr Y.V. Reddy’s list of concerns, a week before the quarterly review of the monetary policy on January 29.

Speaking to presspersons on the sidelines of the 5th convocation of the Indira Gandhi Institute of Development Research and on the day of the meltdown in the Indian stock market, Dr Reddy said, “The global financial uncertainties were not entirely unanticipated but the intensity was not predicted nor was the duration expected. The outlook seems to be far more uncertain now for the global situation than before… There will be considerable attention paid to this in the monetary policy”.

RBI analysis

He said that the RBI would undertake a detailed analysis and articulate to the extent possible the various situations and implications arising out of these global uncertainties.

The RBI will also keep a close tab on the high oil and food prices. Dr Reddy said that the high prices were anticipated and that the “pressures were flat”.

“We will continue to be sensitive to the high oil and food prices as they are essential commodities which have very great impact on the inflationary expectations,” he said.

On the fluctuating liquidity in the system, the Governor said, “In the past, liquidity has been volatile…sometimes it is tight, sometimes it is easy. So, we have to take a long term view, not a contextual view.”