RBI rate hike: Expectations of higher rates ‘a no brainer’, RBI Governor Das says – The Economic Times

Clipped from: https://economictimes.indiatimes.com/news/economy/policy/expectations-of-higher-rates-a-no-brainer-rbi-governor-das-says/articleshow/91737868.cms

Synopsis

The Reserve Bank of India Governor Shaktikanta Das has said that the central bank wants to raise interest rates in the next few meetings and that the expectation of higher rates is a ‘no brainer.’

The Reserve Bank of India Governor Shaktikanta Das has said that the central bank wants to raise interest rates in the next few meetings and that the expectation of higher rates is a ‘no brainer.’

In an interview with CNBC-TV18, the central bank chief said that the RBI will also release a new inflation forecast at its June meeting. “There will be some increase in the repo rate. By how much, I will not be able to tell now but to say that (it will be hiked) to 5.15 percent now will not be accurate.”

The MPC in an unscheduled meeting, held between May 2-4, unanimously decided to hike the benchmark rates by 40 bps. Inflation above the 6% upper range for four straight months prompted the central bank to raise rates.

“One of the reasons for ‘out of turn’ action was to avoid a steep hike in June. Broadly, the RBI wants to raise rates in the next few meetings, at least in the next meeting,” Das said.

The RBI aims to bring down liquidity in a calibrated and a phased manner.

On the currency front, the RBI governor assured the markets that the central bank will not allow the runaway depreciation of the Rupee & will prevent excessive volatility in the currency market.

The government of Prime Minister Narendra Modi over the weekend unveiled a fiscal package of tax cuts and subsidies aimed at taming inflation that has risen to an eight-year high. On this, Governor Das said that the measures will have a sobering impact on the surging inflation.

“We will be able to manage the current account deficit very comfortably this year,” he said, noting that India’s exports have remained robust. “Import is sustaining at higher prices which means that the domestic demand is reviving,” he added.

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