War in Europe may snuff out global recovery: RBI Dy Governor Michael Patra

Says monetary policy decisions by central banks around the world aimed at their own constituencies. But since inflation is the biggest policy issue right now, it seemed coordinated

The current geopolitical situation arising from Russia's invasion of Ukraine threatens to 'snuff out' global economic recovery post the Covid-19 pandemic, Reserve Bank of India Deputy Governor Michael Patra said on Friday.

"Emerging markets bearing the brunt of the Russia-Ukraine war despite being bystanders," said Patra, addressing an event by industry body PHD Chamber of Commerce.

Patra said that monetary policy decisions by central banks around the world were aimed at their own specific constituencies. But given that inflation is the biggest policy issue right now, it seemed coordinated.

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"Global economy is seeing the most coordinated monetary policy tightening cycle ever seen," Patra said, adding that the RBI is trying to stabilise the price situation when the economy is able to bear it.

The Monetary On June 8, the six-member Monetary Policy Committee of the Reserve Bank of India unanimously decided to raise the repo rate by 50 basis points. This followed an off-cycle rate hike of 40 basis points, making it 90 bps rate hike in just a span of a little over a month.

Patra said that the RBI was committed for the rupee to find its orderly level. "We don't have a level in mind, but the movement should not be disorderly, he said, adding that  depreciation of rupee least in the world

"RBI stands for rupee stability and we are defending rupee against volatility," he said.