Reiterating his earlier statement the oil prices are a two-way movement, RBI
Governor Urjit Patel on Saturday warned about the uncertainties, saying that India needs to be prepared either way — whether they go up or down — during a press conference with Finance Minister Arun Jaitley
after the post-Budget customary meeting.
While on the issue of global crude oil prices, Arun Jaitley said there is an uncertainty. He further pointed out that no one predicted that crude oil prices would begin falling as they have in the past three days. To this Urjit Patel responded that the RBI needs to be prepared for the movement of crude oil prices either way. He further explained that that in June last year it was widely predicted that the oil price would not touch $40-$45 per barrel, and some of the advice based on that ‘turned out to be wrong in a major way’.
The RBI in August last year had cut the repo rate by 25 basis points to 6%, but since, has gone for a long pause on concerns of higher inflation and rising crude oil prices. When asked about the recent decision of RBI’s monetary policy post Budget, Arun Jaitley said it was balanced. On fiscal situation, he said that the next year will be reasonably comfortable as far as revenue is concerned and that the government will be able to meet the 3.3% fiscal deficit target of the GDP.
The RBI governor also said that the credit growth of India is at 11% and that there are indications of the pick-up in the credit growth in future. On the recent market meltdown, which happened on a global level, he said that enough risk aversion has been build up but he does not see systematic risks due to current market volatility.
Urjit Patel also expressed his bullishness on India’s growth, saying that the 7.1% growth in the fiscal year 2017 was reasonable due to the demonetisation. The post-Budget meeting between Arun Jaitley and the RBI took place against the backdrop of hardening bond yields and the fear that the interest rates may rise in future.
via RBI Governor Urjit Patel warns against uncertainty over crude oil prices, whether up or down – The Financial Express