Mumbai
Reserve Bank of India (RBI) Governor Shaktikanta Das has ruled out an immediate interest rate cut, despite shifting the central bank’s monetary policy stance to a more neutral tone. Speaking at a media event on Wednesday, he clarified that the change in stance does not imply an interest rate reduction in the next policy meeting.
Das warned that inflation still posed significant risks, particularly with the recent rise in food prices, which caused inflation to climb from 3.65% in August to 5.49% in September. He emphasized that rate cuts would only be considered once inflation sustainably reaches the RBI’s 4% target.
The RBI had kept interest rates unchanged for the 10th consecutive meeting, transitioning from a “withdrawal of accommodation” stance to a “neutral” one. This shift led to speculation that a rate cut might be on the horizon, but Das cautioned that it would be “very risky” to implement a rate cut at this stage.
While concerned about inflation, Das expressed optimism about the Indian economy, citing strong underlying activity despite mixed data. He pointed to the strong recovery in car sales and emphasized the overall health of non-bank financial companies (NBFCs), noting that regulatory action had only been taken against four entities out of 9,400 in the sector.
Das also reiterated that the RBI is not rushing to launch the Central Bank Digital Currency (CBDC), stressing that the pilot project is still in its experimental phase and will be rolled out when fully ready.
