Global economy seeing 'tectonic shifts' from Ukraine war: RBI governor
The global economy is experiencing "tectonic shifts" as a result of the Ukraine conflict, as well as extreme volatility in commodity and financial markets, according to RBI governor Shaktikanta Das, who also announced that the key interest rates - the lending and borrowing rates - will remain unchanged for the 11th time in a row.
"We are up against new but massive obstacles. Shortages of critical commodities, flaws in the international financial system, and fears of de-globalization are all factors to consider. Commodity and financial markets are known for their extreme volatility "he stated
When discussing the start of the conflict in Europe, followed by sanctions and growing geopolitical tensions, the governor of the central bank used the term 'tectonic shifts.' He stressed that the RBI would maintain a stable financial environment in the market and would take steps to mitigate the impact of global spillovers.
However, the central bank said that the liquidity adjustment facility's width will be restored to 50 basis points, a first step away from the ultra-loose monetary policy adopted during the COVID-19 pandemic.
"It should be underlined that, given the significant volatility in global crude oil prices since late February and the considerable uncertainty about increasing geopolitical tensions, growth and inflation projections are risky and primarily dependent on future oil and commodity price developments," says the report.
What's Your Reaction?