RBI's Horse Analogy: War on Inflation - Latest News

Mumbai, Oct 9 (PTI) Reserve Bank Governor Shaktikanta Das on Wednesday used an analogy of a horse, shifting from the elephant, to describe the way the central bank is trying to contain inflation.

For the last few months, Das has been using the elephant analogy, underlining that a tusker needs to return to the forest and stay there, which was interpreted as a need to ensure that headline inflation reaches the 4 per cent target and stays there durably.

"It is with a lot of effort that the inflation horse has been brought to the stable, i.e., closer to the target within the tolerance band compared to its heightened levels two years ago," the governor said on Wednesday.

"We have to be very careful about opening the gate as the horse may simply bolt again. We must keep the horse under a tight leash so that we do not lose control," he added.

The RBI chose for a status quo in rates for one more time but shifted the stance to 'neutral' from the earlier 'withdrawal of accommodation' as it sees more clarity on the inflation front with a moderation in the number in the next few months.

When asked about the shift to the newer animal, Das said, "The reason is that it's a war against inflation. And in a war, elephants and horses are used historically".

He added that mythological hero Arjuna can also make a comeback if needed but made it clear that at present, the central bank is unambiguously focused on bringing down inflation.