New Delhi. Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the reduction in the policy interest rate will depend on the long-term rate of inflation and not on monthly data. The Monetary Policy Committee (MPC) headed by Das is to meet between 7 and 9 October. A decision on the reduction in the policy rate will be taken in the meeting. In the monetary policy review in August, RBI had kept the repo rate at 6.5 percent for the ninth consecutive time in view of high food inflation. In the August meeting, four out of six members of the MPC voted in favor of maintaining the status quo.
In an exclusive conversation with CNBC International, the RBI Governor said that the focus will be on the monthly pace of inflation to see whether the inflation rate is increasing or decreasing. The upcoming inflation growth rate will be seen with a positive attitude and the decision will be taken on the basis of assessment. He said, “The question is not that in the current context, like in July, inflation came down to around 3.6 percent. This is the revised figure. In August it has come down to 3.7 percent. This shows what is the state of inflation right now. Now we have to see what is the outlook on inflation for the next six months, next one year.”
Das said, “That is why, I would like to carefully see what is the pace of inflation and growth in the coming times and based on that we will take a decision.” Asked whether the RBI’s Monetary Policy Committee would actively consider cutting the policy rate in its meeting in October, Das said, “No, I cannot say anything about this.” He said, “We will discuss in the MPC and take a decision, but as far as the dynamics of growth and inflation are concerned, I would like to say two things. One, the pace of growth remains good, India’s growth story remains intact. As far as the inflation outlook is concerned, we have to look at the monthly pace and a decision will be taken based on that.”
He said that the rupee has been one of the least volatile currencies globally, especially since the beginning of 2023. “The rupee has been very stable compared to the US dollar and the volatility index.” He said, “Our declared policy is to prevent excessive volatility of the rupee. He said that keeping the rupee stable creates confidence in the market, investors and the economy.” Das said that the RBI is committed to maintaining financial stability and will continue to take necessary steps to ensure this.
