ECONOMY
RBI Governor Das warns of inflation returning and growth going down
- IBJ Bureau
- Nov 15, 2024
Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday spoke about the central bankers’ perennial dilemma – doing ‘too little or too late’ versus ‘too much or too early’. “During this entire period of great volatility, maintaining price and financial stability has posed difficult trade-offs as evident among others from the banking sector turmoil in certain advanced economies in early 2023,” Mr Das said.
He, however, refused to comment on Commerce Minister Piyush Goyal’s suggestion for a rate cut and reinforced that the rate-setting panel will take an appropriate call on it at its next meeting in December. “The Indian economy is sailing smoothly, powered by buffers like strong macroeconomic fundamentals, a stable financial system and a resilient external sector,” Mr Das said.
He said that the RBI’s “neutral stance from the withdrawal of adoption” stance adopted at its last meeting in October provides “greater flexibility and optionality to act in sync with the evolving conditions and the outlook”.
Mr Das added: “Reading the interplay between monetary policy action and the developments in the financial sector as well as the evolving situation correctly, the timing of the decisions is always challenging. Central banks, by and large, performed well this time around.”
He also said that while “soft landing” has been ensured, risks of inflation coming back and growth coming down remains.
Despite the rise in the last few months, Mr Das expects that the Consumer Price Index (CPI) inflation to moderate. In October, the CPI hit a 14-month high of 6.2 per cent, dashing hopes of a rate cut in December. Wholesale inflation, as measured by the Wholesale Price Index (WPI), also rose to a four-month high of 2.4 per cent in October, mainly because of a spike in food prices.
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