New Delhi [India], November 14 (ANI): Reserve Bank Governor Shaktikanta Das said that the central bank has ensured a “soft landing” after having faced with various headwinds, but “risks of inflation coming back and growth slowing down do remain.”
Speaking at the CNBCTV18 Global Leadership Summit on Thursday, the RBI Governor said risks of inflation is coming back and it may impact growth.
Central banks across the world resorted to tightening of monetary policy because of high inflation due to supply chain disruptions and the war in Ukraine.
Das said, “Soft landing has been ensured, but risks of inflation coming back and growth slowing down do remain. The headwinds from geopolitical conflicts, geoeconomic fragmentation, commodity price volatility and climate change continue to blow”
Das said that in his last monetary policy statement he anticipated that September and October inflation prints were expected to be higher, and that was realised when the official data were made available.
RBI kept the policy repo rate unchanged at 6.5 per cent for the 10th consecutive time. The central bank’s commitment to bringing inflation down to its 4 per cent target on a sustained basis continues to face challenges due to ongoing food inflation.
The next RBI monetary policy meeting is due in the first week of December.
On India’s external sector stability. Das said India’s external sector has exhibited strength and stability in the recent period.
“The current account deficit has remained within manageable limit and stood at 1.1 per cent of GDP in Q1 2024-25. During the first half of 2024-25, India’s merchandise exports recovered from a contractionary zone in 23-24. Services exports have remained buoyant and rose by 11 per cent during the first half of the current financial year,” he said.
“The robust growth in the services exports coupled with buoyant private remittances are helping to contain the current account deficit. On the financing side, net capital inflows have generally exceeded the current account deficit and contributing to accretion of foreign exchange reserves.”
India has the fourth largest foreign exchange reserves in the world at USD 682 billion as on October 31, which is sufficient to cover the entire external debt and about 12 months of merchandise imports, he added.
Das further said that the RBI is working on climate risks and their impact on the financial sector and final guidelines for disclosure framework on climate-related financial risks will be issued shortly. (ANI)
