Reserve Bank of India Governor Y V Reddy on Tuesday said the Indian economy is largely insulated from episodes of global financial instability and the country has built resilience to shocks and is less vulnerable to output volatility.
"Barring supply shocks, in particular, those due to the international oil prices, inflation, especially the core inflation has been fairly low," Reddy said in his inaugural address at the eighth meeting of Bank for International Settlements Working Party on Monetary Policy in Mumbai.
He said over the period policy-making has become more globalised as cyclical changes are becoming more synchronised especially since the 1990s.
"There is increasing convergence in perception, choice of instruments, institutional structure and communication strategy in monetary policy making," he said.
Focussing on country-specific features of India, he said multiple indicator approach followed by RBI was a logical outcome of the multiple objectives that characterise the monetary policy framework.
The enactment of Fiscal Responsibility and Budget Management Act by the Parliament provides further flexibility in conduct of monetary policy, he said.
The BIS meeting was attended by senior executives from central banks of India, Australia, Hong Kong, Indonesia, Japan, Korea, Malaysia, Philippines, Saudi Arabia, Singapore and Thailand.
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