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The ‘below normal' monsoon, as predicted by the meteorology department, is not likely to have a major impact on inflation, said Dr Subir Gokarn, Deputy Governor, Reserve Bank of India.
The real impact on inflation is a function of the regional spread of the monsoon, for which the regional forecasts are more accurate, he said, while speaking on the sidelines of Mutual Fund Summit here on Wednesday.
“For the moment going by this forecast I don't think there is any reason to be concerned. The aggregate will be important, but what is more important is the regional spread,” he said.
Open market operations
When asked if there was possibility of an Open Market Operations anytime soon, Dr Gokarn said that the possibility is always there. “Whether it will done or not depends on the overall assessment of the liquidity situation. So it really is going to be a situational decision,” he said.
About the impact of the Greece situation, Dr Gokarn said that the resolution of the debt crisis in Greece will clearly reduce some of the uncertainty surrounding the state of the euro zone economy. However, it is not confined to Europe alone, the US is also showing signs of slowing down, he added.
“It was what appears to be a broad-based weakening of whatever momentum we saw in the first quarter,” he said.
Dr Gokarn also said that the central bank does not see a major risk to banks' asset quality due to higher interest rates.
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