MUMBAI: The Monetary Policy Committee (MPC) hit a pause as far as the policy rate cut is concerned at its meeting this month after continuously slashing rates since February this year. Reserve Bank of India (RBI) Governor Shaktikanta Das reiterated that there is a scope for further action depending on the incoming data and also when the impact of such an act would be maximum.
In the February policy, the RBI not only changed the policy stance to “neutral”, but also showed a bias towards supporting the growth.
According to Das, analysts commented in February that the policy rate cut was a surprise when the MPC saw inflation was under control, and there was a need to make growth its highest priority. He said the markets again have this view that no rate action came as a surprise, and hoped that events will unfold in such a way to prove the MPC decision was right.
Das said RBI is striving to be transparent in its decisions and clearly communicate and also give forward guidance as it has done since February.
Speaking at India Economic Conclave in Mumbai, he said RBI was ahead of curve in initiating the policy action and also recognising the slowdown. “We had acted a little bit ahead of the time in terms of reducing our policy rates. February, we saw that the momentum for the slowdown is building up, and we started cutting rates… We are slightly ahead of the curve, and our action very timely,” Das said.
Commenting on the economic crisis, especially in the context of the global slowdown, Das said it is a synchronise slowdown, necessitating a coordinated action among the advanced and developing economies. “I am not implying that the slowdown is entirely is due to the global slowdown, but it does impact India,” he said. Comparing the current global scenario to the 2008 global financial crisis, the RBI governor said there is no coming together for a plan of action as G-20 did then.