Rate cut at this stage will be premature and very, very risky, says RBI Governor

Shaktikanta Das during the Bloomberg India Credit Forum in Mumbai, Oct. 18.

The Reserve Bank of India's (RBI) Governor Shaktikanta Das on October 18 said an interest rate cut at this stage will be 'premature, and very, very risky'.

"We are not behind the curve. Indian growth story remains intact. India is poised to growth at 7.2 percent. Growth is steady and resilient, inflation is moderating with certain risk, so a rate cut at this point will be premature and very, very risky," Das said during the fireside chat at the India Credit Forum event, organised in Mumbai by Bloomberg.

While inflation is expected to moderate, Governor Das said that there are 'significant risks' to the outlook.

During the October monetary policy announcement, RBI had maintained the status quo on rate and changed stance to 'Neutral' from 'Withdrawal of Accommodation.'

Further, the governor on the inflation said that it is expected to moderate but there are significant risk, the RBI is monitoring the outlook on inflation and growth.

India’s retail inflation rose to a nine-month high of 5.5 percent in September after remaining below 4 percent for the previous two months owing to higher food inflation.

The steep jump in September was led by a jump in food inflation, which rose to 9.24 percent in September compared with 5.66 percent in the previous month.

On India's foreign exchange reserves front, RBI governor said that the central bank do have any specific target for the reserves. The central bank is not managing the exchange rate.

From January 2022 till now, Indian rupee depreciation vis-a-vis a dollar is 11-11.5 percent, the dollar has appreciated during this period by 8-8.5 percent, Das added.