Rbi Deputy Governor Statement: Reserve Bank of India Deputy Governor Poonam Gupta said on Wednesday that every estimate has a risk of errors, but there is no ‘systemic level bias’ in the central bank’s inflation forecast.
Amid concerns in some quarters, Gupta said the central bank uses various models and expert discussions to arrive at its inflation projections and that getting the projections wrong is not an isolated incident but a ‘global phenomenon’.
Deputy Governor’s statement
He also said that the central bank is also considering releasing the balance of payments data on a monthly basis. Currently these figures are released on quarterly basis. He said this amid widespread changes taking place in global trade policies. Balance of payments gives indications about the external position of the country.
It is noteworthy that the concern regarding inflation estimates has arisen from the estimate of overestimating the figures. Critics argue that this has prevented the RBI from further cutting policy rates in the last few months.
Reading articles in media is ‘fun’,
Acknowledging criticism on the inflation forecast, he said it is ‘fun’ to read articles in the media, and things are written harshly, but he clarified that the RBI takes these views very seriously. Citing conversations with his colleagues in the monetary policy department of the RBI, Gupta said every forecast has a risk of errors and there is no forecaster who gets it right every time.
This happens in other countries of the world also. He said the RBI adopts a multi-pronged approach to forecast inflation, which includes the use of proven models, historical patterns, surveys and consultation with stakeholders including ministries and analysts.
The Deputy Governor also said that the upcoming amendments of the Ministry of Statistics and Program Implementation on Consumer Price Index based inflation (CPI) will be helpful for the Reserve Bank of India.
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