Reserve Bank Governor Shaktikanta Das stated that a rate cut at this stage would be "premature" and "very, very risky" given that retail inflation remains high. He noted that future monetary policy decisions would depend on income data and economic outlook.
Earlier this month, the RBI opted to maintain the status quo on the short-term lending interest rate (repo) due to inflationary concerns, although it adjusted its monetary policy stance to neutral.
The next bi-monthly monetary policy announcement is scheduled for December 6.
Speaking at the India Credit Forum hosted by Bloomberg, Das highlighted that September's inflation was elevated and that the next figures are also expected to remain high before moderating.
"Therefore, a rate cut at this stage would be very premature and could be very, very risky when inflation is at five and a half and the next print is also anticipated to be high," he remarked.
Das refrained from providing indications regarding potential future rate cuts, emphasising that the central bank would make decisions based on incoming data and the broader outlook.
He also clarified that the Reserve Bank does not act as a policeman, but maintains vigilant oversight of the financial markets, taking regulatory action whenever necessary.
This statement came a day after the central bank directed Sachin Bansal's Navi Finserv and three other non-banking financial companies (NBFCs) to cease and desist from sanctioning and disbursing loans, effective from the close of business on October 21, due to significant supervisory concerns, including usurious pricing.
"We are not policemen. We are observing. We are watching very closely. We maintain vigilance over the credit markets, and when it becomes necessary, we take action," he stated at the India Credit Forum.
Das further affirmed that this is India's moment, asserting that the country's growth story remains intact.
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