The Reserve Bank of India Governor Shaktikanta Das stated that it is too early to consider an interest rate cut due to the uncertain economic environment and inflation, which remains close to 5%. In a conversation with CNBC-TV18, Das remarked, “The overall economic environment globally and in India is so uncertain to talk in terms of an interest rate cut. CPI headline inflation continues to be close to 5%, and according to surveys, it is expected to remain at that level.
Hence, it is too early to discuss an interest rate cut.”
In the June monetary policy announcement on June 7, the RBI-led Monetary Policy Committee decided by a majority vote to leave key interest rates unchanged, citing persistent risks to inflation.
Monetary policy remains cautiously balanced
Das emphasized his cautious approach by stating, “I would rather not give any kind of forward guidance which may lead the market players, stakeholders, and others to board the wrong train.”
Regarding the policy stance, Das said, “Target inflation is 4 percent, and we are nowhere near the target; we are still around 5 percent.
Although it is moderating, the pace is very slow. If we want inflation to align faster with the target, monetary policy should be much tighter.”
Das highlighted the balance between growth and inflation as a critical factor in their current approach. “We have not opted for stringent measures because we aim to balance growth and inflation, choosing a calibrated path to align inflation with the target.
Given the current distance from the 4 percent target, which is 70 basis points and may go up to 80 bps, it is too early to talk about a change in stance.”
This position underscores the RBI’s careful approach to monetary policy amid fluctuating economic indicators and inflation concerns.
