RBI governor dashes rate-cut hopes; says would be premature, risky at this stage

by Saurabhpandey
0
Posted on October 18, 2024
34

RBI governor dashes rate-cut hopes; says would be premature, risky at this stage

Mumbai: Reserve Bank of India governor Shaktikanta Das ruled out a rate cut in the immediate future, given that headline inflation is expected to rise in October as well before it starts moderating.

Speaking at a fireside chat organised by Bloomberg wire agency on Friday, Das cautioned that rate cuts at this stage would be “premature” and risky.

RBI uses its key repo rate—the interest rate at which banks borrow from it—to manage inflation, which spiked to a nine-month high in September. A lower rate can spur borrowing, consumption and economic activity. But RBI has kept its repo rate unchanged at 6.5% for nearly two years despite the US Federal Reserve and the central banks of some other countries lowering their policy rates recently.

“Rate cut at this stage will be premature and can be very risky, when inflation is 5.2% and next print is also expected to be high, more so if growth is doing well,” said Das. “We will not miss the (global) party. We will wait and watch and join the party when inflation figure is durably aligned.”