And, while there may arise situations where monetary policy needs to be used to deal with potential financial instability, I believe that macroprudential policies will become an important complement to our traditional tools.
Second, lack of an economy-wide measure of the rate of unemployment makes the conduct of monetary policy in India complex. While framing appropriate policy responses to trends in output and inflation, policymakers would like to make some assessment as to whether the economy is operating beyond or short of full employment.