Retail inflation data for June will be released on Friday.
Reserve Bank of India Governor Shaktikanta Das on Thursday said that India’s retail inflation is expected to be close to 5% in June, in line with the surveys conducted by the apex bank. Retail inflation data for June will come on Friday.
The RBI is expected to release the neutral rate after finishing the ongoing analysis over the next 1-2 months, he said in an interaction with CNBC-TV18.
On interest rate cut, the Governor said that it is too early to comment on that given the uncertain economic environment and inflation being close to five percent.
“The overall economic environment globally and in India is so uncertain to talk in terms of interest rate cut. Second thing is CPI headline inflation continues to be close to 5 percent and according to surveys done it is expected to close 5 percent and I think it is too early to talk on interest rate cut,” he said in the interview.
“I would rather not give any kind of forward guidance which may lead the market players, stakeholders and others to board the wrong train,” he added.
In June monetary policy, the RBI-led Monetary Policy Committee (MPC) left the key interest rates unchanged. Two of the six members of the MPC voted to cut the policy repo rate.
He said that the framework on the Expected Credit Loss (ECL) is anticipated to be out in this fiscal year.
“ECL norms we are working on it and it is in the final stages. It will be out in the current financial year. All the comments have come and it is in the final stages of examination,” he said.
The ECL model, which has been proposed by the central bank, says that the banks are necessitated to identify stress much earlier.
Das asserted that India’s current rating of BBB- should have been upgraded earlier but is optimistic about it happening now. He pointed out the government’s commitment to fiscal consolidation, highlighting the interim budget’s fiscal deficit target of 5.1 percent and the planned reduction to 4.5 percent by 2025-2026.
He expressed confidence that India’s economic policies are aligning with this roadmap, indicating a positive trajectory that supports a rating upgrade.
Source:financialexpress.com