RBI Governor Shaktikanta Das Rules Out Rate Cuts as Inflation Remains High

India‘s central bank, the Reserve Bank of India (RBI), has stated that it will not consider interest rate cuts unless inflation settles around the 4% target. Governor Shaktikanta Das clarified that policymakers have not even initiated discussions on the subject yet. Das made these remarks during an interview with Bloomberg Television‘s Haslinda Amin at the World Economic Forum in Davos.

The RBI has maintained the interest rates unchanged for five consecutive policy meetings, adopting a relatively hawkish stance due to inflation remaining above the target range. Economists anticipate rate cuts following the Federal Reserve‘s easing measures.

Das dismissed the notion of India’s rate cuts being linked to those of the Federal Reserve, stating that rate cuts in India are contingent upon domestic factors. He emphasized that the RBI’s policy is geared towards active disinflation.

In December, inflation in India reached a four-month high, driven primarily by volatile food prices. However, the core measure, which excludes food and fuel costs, dropped below 4% for the first time in nearly four years, raising expectations of rate cuts. The RBI focuses on headline inflation, which has now entered the target range of 2% to 6%, but the central bank’s objective remains to steadily move towards the 4% target, asserted Das.

Das reiterated his outlook on the Indian economy, predicting that economic growth will reach 7% in the next fiscal year, while inflation will average around 4.5%. He stated that this would mark a period of four consecutive years with a growth rate of 7% or higher, reflecting the resilience of the Indian economy.