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RBI to study inflation expectations

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BANKERSPEAK: Axel A. Weber (right), President of Deutsche Bundesbank and council member of the European Central Bank, speaks to an audience at the Reserve Bank of India in Mumbai on Friday.
BANKERSPEAK: Axel A. Weber (right), President of Deutsche Bundesbank and council member of the European Central Bank, speaks to an audience at the Reserve Bank of India in Mumbai on Friday.

The move is to gauge the sentiment of common man

  • Data from financial markets will be used
  • RBI follows example of developed world

    MUMBAI: In a bid to keep a tab on prices of essential commodities, the Reserve Bank of India will for the first time conduct a survey of inflation expectations in the country soon.

    Announcing this, RBI Governor Y. V. Reddy on Friday said that as prices affected people, it was important to study inflation expectations to gauge the sentiment of the common man.

    Dr. Reddy, however, did not elaborate on the subject, but bankers said that among the factors that generally influenced inflation were people's expectations about price rise. Central banks in the developed world routinely conduct inflation expectation surveys. Though such studies are not foolproof, it will certainly act as an additional tool to monitor people's expectations on prices.

    Dr. Reddy said there were not many professional forecasters and the RBI would make use of data available from the financial markets for the purpose.

    Earlier, Prof. Axel Weber, President of the Deutsche Bundesbank, who delivered an address at the RBI headquarters here on monetary policy strategy in Europe and made reference to the concept, said consumers could more easily give their expectation about prices of goods they consumed daily but not about products which they did not use frequently.

    Prof. Weber said there had been a strong recovery in the world economy with credit to the private sector growing at record level. PTI


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