Interest rate will remain high for now: RBI Governor
At the Kautilya Economic Conclave 2023, Reserve Bank of India (RBI) Governor Shaktikanta Das announced that interest rates will stay high for now, without giving a specific timeline for a decrease. "Interest rate will remain high at the moment, (for) how long, only time will tell," Das said in response to a query. In his speech, Das also highlighted the complex nature of monetary policy and made it clear that there is no place for complacency.
Global central banks and India's inflation
It is worth noting that central banks around the world have increased their key policy rates to fight high inflation. In India, inflation has been easing and has dropped significantly since its peak in July. Following this trend, the RBI had also raised the repo rate by 250 basis points since May 2022. However, the central bank paused its rate hike streak in February, keeping the repo rate stable at 6.5%.
No rate cuts on RBI's agenda
Governor Das made it clear that cutting interest rates isn't on the RBI's to-do list right now. Instead, the central bank is keeping an eye on India's inflation dynamics and is ready to take necessary actions. Das admitted that predicting central banks' moves in these uncertain times is tough, making it hard to offer more than general forward guidance.
