Key facts
- India's central bank chief stated that discussions of interest rate hikes are premature.
- The central bank is monitoring the broader economic impact of higher oil prices on inflation.
- Governor Shaktikanta Das said the central bank is not 'behind the curve' on monetary policy.
- The Reserve Bank of India has kept its key interest rate unchanged for approximately two years.
- Das mentioned the RBI intervenes in the currency market by buying dollars when opportunities arise and supplying them when the rupee faces pressure.
- The rupee touched a record low of 84.0775 on Friday.
India’s central bank Governor Sanjay Malhotra pushed back against expectations for future interest-rate increases, saying it was “premature” to discuss the policy outlook given ongoing geopolitical uncertainties. Malhotra stated that if it were certain that rates would rise in the coming months, the central bank would have changed its stance from neutral to restrictive, which it did not do due to elevated uncertainty. The Reserve Bank of India (RBI) has maintained its benchmark rate unchanged for approximately two years, contrasting with global central banks like the U.S. Federal Reserve and the European Central Bank, which have initiated rate cuts this year. Governor Shaktikanta Das clarified that the RBI is not actively managing the exchange rate but intervenes by purchasing dollars during favorable opportunities and supplying them when the currency experiences pressure. The rupee had touched a record low of 84.0775 earlier in the day, influenced by sustained outflows from local equities, though the RBI's likely intervention is believed to have prevented steeper declines.