RBI Governor: No Rate Cut Yet as June Inflation Hits 5%

Mumbai: The Reserve Bank of India (RBI) Governor Shaktikanta Das announced on Thursday that India’s retail inflation for June is anticipated to hover around 5%, based on the central bank’s surveys. This data aligns with the trends observed over the past few months. The official retail inflation figures for June will be released on Friday.

In an interview with CNBC-TV18, Das emphasized that it is too early to discuss any potential interest rate cuts due to the prevailing uncertain economic conditions both globally and domestically. “The overall economic environment, both globally and in India, is too uncertain to talk about an interest rate cut. The CPI headline inflation continues to be close to 5%, and our surveys indicate it will remain at that level,” he explained.

The June monetary policy meeting saw the RBI-led Monetary Policy Committee (MPC) keeping the key interest rates unchanged. This decision was influenced by persistent risks on the inflation front, with two out of six MPC members advocating for a policy repo rate cut.

Das also mentioned that the RBI is in the final stages of developing the Expected Credit Loss (ECL) framework, which is expected to be released within the current fiscal year. “We are working on the ECL norms, which are in the final stages. It should be out this financial year,” he said.

Discussing India’s credit rating, Das asserted that the country’s current BBB- rating should have been upgraded earlier, expressing optimism about a potential upgrade now. He highlighted the government’s commitment to fiscal consolidation, pointing out the interim budget’s fiscal deficit target of 5.1% and the planned reduction to 4.5% by 2025-2026. “India’s economic policies are aligning with this roadmap, indicating a positive trajectory that supports a rating upgrade,” he added.