Reserve Bank of India (RBI) Governor Shaktikanta Das stated on Thursday that retail inflation in India is expected to be close to 5% for June, in line with surveys conducted by the RBI. The official data on retail inflation for June is anticipated on Friday.
Speaking with CNBC-TV18, Das underscored the unpredictability of the current economic environment, making it premature to consider any interest rate cuts. “Given the uncertain economic environment globally and in India, it’s too early to talk about an interest rate cut. The CPI headline inflation remains near 5%, and our surveys confirm it is expected to stay around this mark,” he remarked.
In its June meeting, the RBI-led Monetary Policy Committee (MPC) opted to keep key interest rates unchanged, despite two out of six members voting for a reduction in the policy repo rate. This decision was driven by ongoing inflationary concerns.
Das also provided an update on the Expected Credit Loss (ECL) framework, which the RBI plans to finalize within this fiscal year. “The ECL norms are in the final stages of development and should be released in the current financial year. We have reviewed all comments and are close to finalizing the norms,” he noted.
Furthermore, Das addressed India’s credit rating, currently at BBB-, suggesting that it should have been upgraded earlier. He expressed optimism that an upgrade is now likely, citing the government’s efforts toward fiscal consolidation. He highlighted the interim budget’s fiscal deficit target of 5.1% and the plan to reduce it to 4.5% by 2025-2026. “India’s economic policies are on a positive path that supports a potential rating upgrade,” Das concluded.
