(Bloomberg) -- Sign up for the India Edition newsletter by Menaka Doshi – an insider's guide to the emerging economic powerhouse, and the billionaires and businesses behind its rise, delivered weekly.
India’s central bank will consider its job unfinished until inflation moderates around its 4% target on a durable basis, Governor Shaktikanta Das said.
Stable inflation is in the best interest of an economy and its people, Das said at a policy conference of central banks in Mumbai on Thursday. “Price stability is just as crucial as growth,” he said.
The Reserve Bank of India has kept interest rates unchanged for almost two years, with Das repeatedly dashing hopes of rate cut despite the central bank shifting its policy stance to neutral recently. A sharp spike in inflation in October to above the 6% upper end of the target band has given the RBI further reason to stay hawkish. Most economists see a rate cut only early next year.
Calls are growing louder from within the government for the RBI to ease. Finance Minister Nirmala Sitharaman and Trade Minister Piyush Goyal both recently stated that high borrowing costs are hurting the economy.
The next rate decision is scheduled for Dec. 6. Das’s current three-year contract ends on Dec. 10, with no signal from the government or RBI if the governor will remain in his post.
In his speech Thursday, Das said India’s resilient growth has given the RBI space to persist with its inflation fight. He said his advice to fellow central bankers in so-called Global South countries was that while pursuing growth is crucial, it shouldn’t come at the cost of high inflation.
--With assistance from Preeti Soni.
©2024 Bloomberg L.P.