New Delhi. Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday that given the difference between the current rate of inflation and the target of bringing it down to four percent, the question of change in the stance on policy rate does not make any sense at the moment.
In an exclusive interview with news channel CNBC-TV18, Das said, “Given the difference between the current rate of inflation and the target of bringing it down to four percent, the question of a change in the stance in terms of policy rate does not make sense at the moment… When we move towards bringing retail inflation down to four percent on a sustainable basis, only then will we get the confidence to think about a change in stance.” He said that the work of bringing inflation in line with the target is progressing as expected, but the target of four percent is the last stop, which is not easy.
In the bi-monthly monetary policy review presented in June, the RBI has projected Consumer Price Index (CPI) based inflation to be 4.5 percent in the current financial year 2024-25. Retail inflation is estimated to be 4.9 percent in the first quarter (April-June), 3.8 percent in the second quarter, 4.6 percent in the third quarter and 4.5 percent in the fourth quarter.
The central bank has the responsibility to keep the retail inflation at four percent with a variation of two percent. Retail inflation is mainly considered while determining the monetary policy.
Regarding the Gross Domestic Product (GDP), Das said that many factors that accelerate growth are playing their role. The pace of economic growth was very strong in the fourth quarter of the last financial year and it remains strong in the first quarter of the current financial year as well.
The RBI had raised its GDP growth forecast for the current fiscal year to 7.2 per cent from 7 per cent in its June monetary policy review, citing rising private consumption and revival in demand in rural areas.