“There’s no question that rates will go up. There will be an increase, but I can’t say how much it will be right now. Saying 5.15 percent may not be very accurate, “Das told CNBC-TV18.
The Monetary Policy Committee (MPC) meets again from June 6 to 8.
RBI changed the repo rate for the first time in two years and raised it for the first time in almost four years. This happened after an off-cycle meeting earlier this month.
In April, RBI raised its inflation forecast for the current fiscal year to 5.7% from 4.5% and lowered its GDP forecast for 2022-23 from 7.8% to 7.2%, citing the effects of rising geopolitical tensions caused by the war between Russia and Ukraine.
Das also said that the RBI and the government have moved into a new working phase to decrease inflation.
In the last two or three months, he said RBI had taken many steps to bring down inflation. On the other hand, the government has also taken steps to stop the export of wheat and lower the tax on gasoline and diesel.
He said that all of these will have a sobering effect on price increases.
The RBI’s upper tolerance level for retail inflation exceeded for the past four months.
The government has told MPC, led by the governor of the RBI, to keep retail inflation between 2% and 6%.
According to the most recent data, the Consumer Price Index (CPI) inflation rate has risen to 7.79% from 6.95% last month and 4.21 in April 2021.
RBI Governor Shaktikanta Das
“Today, interest rates are negative in almost every country except Russia and Brazil. The goal for inflation in the world’s most developed economies is about 2%. All advanced economies have inflation of over 7%, with the exception of Japan and one other country “he said.
The governor said, “We will move toward positive real rates, but it’s hard to say how soon because things are always changing.”
The economy isn’t all bad news, though. Private investment is showing signs of getting better.
Das wrote in the minutes of the MPC meeting that ended on May 4. That the rise in domestic economic activity is becoming more widespread.
RBI Governor Shaktikanta Das price hikes
The outlook for agriculture is still good because the southwest monsoon is expected to normal in 2022. Which will help rural consumption. With higher capacity utilization and more capital goods made, investment activity is picking up speed “he had said.
He had said that exports were still doing well and that the continued high growth of imports was a sign that domestic demand was picking up.
Still, he had said that higher global commodity prices because of a long-lasting geopolitical conflict, a long-term shortage of key inputs, and policy tightening by major central banks are all things that could hurt the economy at home.
Das said that the government is likely to meet its goal for the fiscal deficit.
He also thinks there might not be a need to raise the limit on how much can be borrowed.
The fiscal deficit is expected to be 6.4% of GDP in 2022-23. This is in line with the plan announced last year to reduce the deficit to less than 4.5% of GDP by 2025-26.