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MPC needs to work out its inflation model: Surjit Bhalla

IANS  |  Mumbai 

Calling for a rate cut, Prime Minister Modi's Economic Advisory Council member Surjit Bhalla on Tuesday said the Reserve of India's Monetary Policy Committee (MPC) needs to work out its model.

According to him, there was an expectation that the MPC can't do anything given the fact that fiscal deficit, oil prices and are going up.

"I do not subscribe to any of those because what we have to look at, as an economist, is the real interest rates," Bhalla said in an interview with BTVi, asking how can the country get investments with high interest rates and noting the real determinant of investments is the cost of capital.

The Reserve of India's MPC meeting commenced on Tuesday. According to economic observers, the central was expected to keep its key unchanged at its penultimate monetary policy review of the fiscal on Wednesday owing to higher in October and a surge in oil prices, even as the reversal in the decline of GDP growth during the second quarter has eased pressure on the central to cut rates.

Bhalla said MPC has been missing the forecast and it needs to work out its model.

"If they think the over the next year will be 5 per cent then they should do nothing. Their forecasts of has been terribly wrong..."

"The rate between April to October was 2.7 per cent, which is lowest ever for this time period... the MPC can cook up any numbers as it feels like. Indeed, it has been cooking up the numbers... I think MPC needs to work out its model."



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 05 2017. 21:12 IST