Exclusive: Scenarios Favourable For Policy Rate Cut, RBI Chief Explains
A decision on reducing the policy rate will depend on keeping inflation in check, Reserve Bank of India Governor Shaktikanta Das told NDTV in an exclusive interview.
Any reduction in the policy rate will also depend on future data, with inflation being the biggest influencer, the RBI chief told NDTV Editor-in-Chief Sanjay Pugalia when asked to explain the RBI’s complex work in a layperson’s language.
Mr Das denied the RBI ever said it expected inflation to go below 4 per cent.
“We never said inflation would go below 4 per cent, if you see the MPC meeting details carefully,” Mr Das said, referring to the Monetary Policy Committee which reviews and fixes India’s policy rate.
“What we seek is a durable alignment of inflation to target, meaning around 4 per cent. We need to have confidence that it (inflation) will stay around 4 per cent. We have to be patient. We need to cover more distance,” the RBI chief told NDTV.
He said any adverse effect on growth due to not reducing policy rate is “minimal and negligible”.
“Growth sacrifice is minimal, almost negligible. We are still growing 7.2 per cent, the fastest in the world. Growth remains intact, stable, resilient, but we need to reduce inflation,” Mr Das said.
He said if food prices are very high, the common people will not find any rate cut credible. “It is very important to keep inflation in mind while taking any major decision… Whether to cut policy rate depends on future data. For now, we are confident inflation is reducing, and we are hoping it will be around 4 per cent. For now we see it at 4.5 per cent,” Mr Das said.
A marked growth is visible in the consumer staple segment, and the trajectory in volume improvement is likely to continue in the coming quarters of 2024-25, Motilal Oswal Financial Services said earlier today. The expected volume growth outlook as predicted by the financial advisory firm is because of stable retail inflation, a healthy progress of the monsoon, and the government’s budgetary allocation towards boosting the rural economy.
Consumer staples companies have struggled to maintain volume growth momentum during the last two years, largely due to external challenges such as erratic monsoons and high inflation, which severely dampened consumption in the mass segment.
