homeeconomy NewsRBI Governor clarifies that rate hike pause doesn't indicate so for upcoming policies
RBI Governor clarifies that rate hike pause doesn't indicate so for upcoming policies
While addressing the media, after the monetary policy announcement, Governor Das said that the central bank would pause its rate hikes for this meeting only and not for future meetings.
RBI Governor Shaktikanta Das has announced that the Indian central bank will not hike its lending rate (repo rate) contrary to what market watchers and economists were expecting. A CNBC-TV18 poll had seen 90 percent of economists predict a 25-bps rate hike. Thus, the lending rate stands at 6.5 percent as announced on February 8 in the previous policy.
While addressing the media, after the monetary policy announcement, Governor Das said that the central bank would pause its rate hikes for this meeting only and not for future meetings.
Governor Das explained that the decision was made based on the current economic conditions in the country. He also noted that it was not prudent to give specific forward guidance on rates, as the bank's decisions would be based on a range of factors, including inflation, growth, and financial stability.
He said, “If I have to characterize today’s monetary policy in just one line, I will say it’s a pause not a pivot. Therefore, the MPC remains watchful and will not hesitate to take further action in its future meetings, as maybe necessary. So, the job is not yet finished. And given that there is overall macro-economic and financial stability, our priority continues to be price stability.”
“There has been an effective rate increase of 290 basis points over the last one year including the standing deposit facility (SDF) of 40 bps rate increase and this 290-bps increase has translated to a monetary policy transmission by way of increase in the overnight call rates; the overnight call rates have gone up from daily average in March 2022 to the daily average in March 2023 by 320 bps,” he added.
Another topic that was discussed at the conference was the need to build towards the internalisation of the rupee. T Rabi Sankar, Deputy Governor of the RBI, emphasized the importance of this goal, explaining that it would help to reduce the country's dependence on foreign currencies and enhance its economic sovereignty.
Meanwhile, Michael Patra, Deputy Governor of the RBI, expressed confidence that both headline and core inflation would moderate in the coming months. He also said that relative to the last meeting, the bank was much better off on real interest rate terms, which would support the country's economic growth.
Overall, the RBI officials struck a cautious note at the conference, acknowledging the challenges facing the Indian economy while expressing confidence in its ability to weather the storm. While there are undoubtedly risks and uncertainties ahead, the bank's leaders seemed determined to navigate them with prudence and foresight.
For more details, watch the accompanying video
(Edited by : Abhishek Jha)
First Published: Apr 6, 2023 2:29 PM IST
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