Expectation Of Rate Hike In June, It's A No-Brainer, Says RBI Governor Shaktikanta Das

The next meeting of the Monetary Policy Committee (MPC) is scheduled for June 6-8

RBI Governor Shaktikanta Das said the central bank has taken a number of steps to moderate inflation in the last 2-3 months. ( Image Source :PTI )

New Delhi: Governor of Reserve Bank of India (RBI) Shaktikanta Das on Monday hinted at another interest rate hike in early June to bring down high inflation rate which has remained above the tolerance level for the past four months, the PTI reported.

“Expectation of rate hike, it’s a no-brainer. There will be some hike but how much I will not be able to tell now... to say that 5.15 (per cent) may not be very accurate,” Das told CNBC-TV18.

The next meeting of the Monetary Policy Committee (MPC) is scheduled for June 6-8.

The central bank, in its first rate move in two years and its first hike in nearly four years, raised the repo rate by 40 basis points to 4.40 per cent in an off-cycle meeting earlier this month.

In April, the RBI raised its inflation forecast for the current fiscal year to 5.7 per cent from earlier estimate of 4.5 per cent and lowered its GDP estimate to 7.2 per cent from 7.8 per cent for 2022-23, citing the impact of escalating geopolitical tensions triggered by the Russia-Ukraine conflict.

Das said the RBI and government has entered into another phase of coordinated action to cool down inflation.

The RBI has taken a number of steps to moderate inflation in the last 2-3 months, he said, adding that the government on other hand has taken measures, including wheat export ban and cut in excise duty on petrol and diesel.

All these put together will have sobering impact on price rise, he added.

Retail inflation has been above RBI's upper tolerance level for the past four months. The government has mandated MPC headed by the RBI Governor to keep the retail inflation between 2 to 6 per cent.

As per the latest print, the Consumer Price Index (CPI) inflation increased to 7.79 per cent against 6.95 per cent in the previous month and 4.21 per cent in April 2021.

"Interest rates in almost every country today are negative, except Russia and Brazil. The target for inflation for advanced economies is about 2 per cent. Except for Japan and one more country, all advanced economies have inflation of over 7 per cent," he said.