RBI Governor Shaktikanta Das
Reserve Bank of India (RBI) Governor Shaktikanta Das has predicted that loan EMIs will be reduced. The reduction in loan EMIs means a reduction in the RBI repo rate, which the RBI has kept frozen for about one and a half years. On the one hand, the European Central Bank is cutting interest rates. On the other hand, the Federal Reserve has also indicated that it will cut the policy rate. Unlike these two, the RBI has a different view. The RBI Governor says that India’s policy rates will be based on the country’s economic conditions and economic data.
RBI Governor says policy rate cut will depend on long-term inflation rate and not monthly numbers. The Monetary Policy Committee (MPC) meeting under Das’ chairmanship will be held between October 7 and 9. The decision to cut the policy rate will be taken at the meeting. In the August monetary policy review, the RBI had kept the repo rate at 6.5 per cent for the ninth consecutive time in view of high food inflation. In the August meeting, four out of six MPC members voted in favour of maintaining the status quo.
Long-term inflation figures will decide the cut.
In a special conversation with CNBC International, the RBI governor said that the focus will be on the monthly pace of inflation to determine whether the inflation rate is increasing or decreasing. The next inflation rate will be considered positive and the decision will be taken on the basis of an assessment. He said that the point is not that in the current context, as in July, inflation has come to around 3.6 percent. This is a revised figure. In August, it came down to 3.7 percent. This shows what the current situation of inflation is. Now we have to see what the inflation outlook is for the next six months, next year.
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Is it difficult to cut back in October?
Das said that, therefore, I would like to watch closely what will be the pace of inflation and growth in the coming time and based on that we will take a decision. Asked whether the RBI Monetary Policy Committee will actively consider cutting the policy rate at its October meeting, Das said no, I cannot say anything on that. He said that we will discuss and take decisions at the MPC, but as far as growth and inflation dynamics are concerned, I would like to say two things. Firstly, the pace of growth remains good and India’s growth story continues. As far as inflation outlook is concerned, the monthly pace will have to be looked at and based on that a decision will be taken.
The rupee has remained stable.
Das said the rupee has been one of the least volatile currencies globally, especially since the beginning of 2023. The rupee has been very stable against the US dollar and the volatility index. He said our stated policy is to avoid excessive volatility in the rupee. He said keeping the rupee stable builds confidence in the market, investors and the economy. Das said the RBI is committed to maintaining financial stability and will continue to take necessary steps to ensure it.
