Thursday 13 May, 2010
Subir Gokarn Reserve Bank Deputy Governor on Thursday asserted the Greek debt crisis will not force the central bank to give up its hawkish monetary policy stance. He said it has already factored in the impact of global uncertainties. Gokarn told reporters in Mumbai, “We do not believe that there is any reason to change our approach, because it (the Greek crisis) is not showing signs of spilling over to a larger real problem.”
To fight the financial crisis that broke out in end-2008, the apex bank reduced its key rates several times. The Reserve Bank, to contain inflationary pressures in the economy, started gradually reversing the easy money stance from October last year. Subir Gokarn, who was earlier an economist with international rating agency Standard and Poor’s, asserted, “It (the crisis) reflects, obviously, the continuing global uncertain environment, which is a factor we have already built into our exit strategy.”
Gokarn said, the central bank, however, is keeping a close watch on the development unfolding in the global market. He said, “There are packages in place, there are very serious efforts to contain and not let the crisis to spread to other countries. But we keep a watch on things and see how it pans out.” Gokarn further said the IIP (Index of Industrial Production), which grew to 13.5 per cent in March, was in consonance with the RBI’s outlook.
The leaders of euro zone agreed on a bailout package of approximately USD one trillion, in a bid to prevent the Greek debt crisis from spreading to other economies. He said, revival in the Europe and US is must for a global economic recovery, as these zones account for a larger chunk of the global GDP.
