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RBI Governor
Photo Courtesy: File image by Ministry of Information & Broadcasting via Wikimedia Commons

It's too early to talk on interest rate cut: RBI Governor

| @indiablooms | Jul 12, 2024, at 06:32 pm

New Delhi/IBNS: Shaktikanta Das, the Governor of the Reserve Bank of India (RBI), on Thursday (July 11) said it is too early to talk on the interest rate cut due to the uncertain economic environment and inflation remaining closed to 5 percent.

During an interview with CNBC-TV18, Shaktikanta Das said, “The overall economic environment globally and in India is so uncertain to talk in terms of interest rate cut."

"Second thing is CPI headline inflation continues to be close to 5 percent and according to surveys done it is expected to close 5 percent and I think it is too early to talk on an interest rate cut,” the governor said.

In the June monetary policy that was announced on June 7, the RBI-led Monetary Policy Committee (MPC) left the key interest rates unchanged by a majority decision of the panel members, citing continuing risks on the inflation front, according to reports.

"I would rather not give any kind of forward guidance which may lead the market players, stakeholders and others to board the wrong train," the RBI Governor said.

On the stance front, Governor Das said, "There is a reason for that. Target is 4 percent and we are nowhere near the target, we are still around 5 percent, the expectation is that it will moderate and indeed it is moderating. But the pace of moderation is very slow. If we want faster alignment of inflation to the target, the monetary policy should be much tighter."

"We have not done it because we maintain balance between growth and inflation, so we have not done it and chosen a calibrated path to align the inflation with the target," Das added. "So we are quite a distance away from the 4 percent target, given the distance we have which is currently 70 basis points, which may go to 80 bps, so it's early to talk on a change in stance."

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