RBI Governor Shaktikanta Das Cautions Against Premature Rate Cut Amid High Inflation

Governor Das also commented on the RBI's regulatory role, clarifying that the central bank does not act like a "policeman," but maintains strict oversight of financial markets

RBI Governor Shaktikanta Das said that future monetary policy decisions will be driven by incoming data and the inflation outlook.

Source : PTI

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday warned that a rate cut at this stage would be "premature" and "very, very risky" due to persistently high retail inflation. He noted that future monetary policy decisions will be driven by incoming data and the inflation outlook.

Speaking at the India Credit Forum hosted by Bloomberg, Das highlighted that inflation remains elevated. "September inflation was high, and the next print is also expected to remain elevated before moderating," he said, stressing that any rate cut now would be unwise. "When inflation is around 5.5 per cent and expected to stay high, cutting rates would be very risky," he added.

Earlier this month, the RBI kept the key repo rate unchanged, citing inflationary concerns, although it shifted its monetary policy stance to neutral. The central bank's next bi-monthly monetary policy review is scheduled for December 6.

Governor Das refrained from providing any indications regarding future rate cuts, reiterating that decisions would depend on "incoming data and the overall outlook."

Das also commented on the RBI's regulatory role, clarifying that the central bank does not act like a "policeman," but maintains strict oversight of financial markets. His remarks came after the RBI took action against Sachin Bansal's Navi Finserv and three other non-banking financial companies (NBFCs), directing them to cease disbursing loans from October 21 due to supervisory concerns.

"We are not policemen, but we are closely watching. When necessary, we take action," Das said, underscoring the central bank's commitment to ensuring stability in the credit markets.

On a positive note, Das expressed confidence in India's economic trajectory, stating that "India's growth story is intact" despite global uncertainties.