He said, “It would be premature to talk about a recession in the United States. All that I would like to say from the point of view of the Reserve Bank, is that we will be watchful of all incoming data from domestic, as well as, in this case, from external sources, and we will deal with all emerging situations.”
“Today, India has improved its resilience vis-a-vis external shocks quite a bit. I think India is far more resilient than it was earlier. We will have to wait for the incoming data and deal with the situation,” Das further added.
The RBI governor has constantly emphasised that the US Fed action does not impact RBI’s decision making process.
However, the recent recession fears spiked when the latest data showed a less than expected job creation in the US. The Federal Reserve Chairman Jerome Powell gave a forecast that triggered a market forecast of at least three interest rate reductions this year. And that is triple of what investors were expecting.
So was the case with the European Central Bank that was ahead of the US in reducing interest rates as Euro area economies have slowed substantially.But, talking about these concerns, Das said, “Based on one month data, we cannot rush to conclusion of recession, slowdown in world’s largest economy.”
Repo rate, inflation and growth forecasts
The RBI MPC decided to keep the repurchase rate (repo rate) unchanged at 6.5 per cent for the ninth time in a row.
The MPC left its inflation forecast for this fiscal year (FY25) unchanged at 4.5 per cent, even amid caution on food price trajectory that may hurt core inflation and intensifying geopolitical tensions which poses threat to any comfort on crude prices easing to multi-month lows.
The central bank now sees inflation for Q2, Q3 and Q4 of this fiscal year at 4.4 per cent, 4.7 per cent and 4.3 per cent, respectively. In the June policy, the monetary authority had pegged the inflation readings at 3.8 per cent, 4.6 per cent and 4.5 per cent respectively.
The MPC continues to expect Indian economy to grow at 7.2 per cent in FY25, even as it moderated outlook for the first quarter, Governor Das announced.
While forecast for FY25, Q2FY25, Q3FY25 and Q4FY25 was left unchanged, Das said forecast for Q1FY25 has been reduced to 7.1 per cent.