Global Statistics

All countries
704,753,890
Confirmed
Updated on May 20, 2024 1:53 am
All countries
560,567,666
Recovered
Updated on May 20, 2024 1:53 am
All countries
7,010,681
Deaths
Updated on May 20, 2024 1:53 am

Global Statistics

All countries
704,753,890
Confirmed
Updated on May 20, 2024 1:53 am
All countries
560,567,666
Recovered
Updated on May 20, 2024 1:53 am
All countries
7,010,681
Deaths
Updated on May 20, 2024 1:53 am
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RBI governor says policymaking has become extraordinarily complex, indicates interest rates will remain high

Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the Kautilya Economic Conclave 2023 on October 20, expressing his views on the complexities of policymaking in the current economic landscape. He highlighted the challenges faced by the RBI and the intricacies of managing India’s monetary policy and ensuring financial stability.

Das noted that the RBI had maintained a pause on policy rates throughout 2023, citing the ongoing impact of the 200 basis point hikes previously implemented. He expressed the belief that interest rates would remain high, with the duration depending on evolving global circumstances.

Acknowledging global economic headwinds, such as a slowdown in global growth and persistent inflation, Governor Das praised the resilience of the Indian economy. He emphasized the RBI’s vigilance regarding inflation dynamics, especially uncertainties related to food inflation, and stressed the need for caution in this area.

Discussing the challenges facing the global economy, Das outlined a trio of issues: slowing growth, risks to financial stability, and a gradual easing of inflation. These challenges have amplified the complexity of central banks’ tasks worldwide.

Governor Das emphasized the delicate balance central banks must maintain between promoting economic growth and ensuring financial stability, recognizing potential conflicts between these objectives. He highlighted the sensitivity of financial markets to even minor pieces of information, making market reactions a crucial factor in policymaking decisions.

Addressing the issue of financial stability, Das stressed the significant responsibility central banks have in maintaining stability. He mentioned the need to quantify financial stability, a task he acknowledged as intricate. Das also underscored the importance of identifying vulnerabilities during periods of economic prosperity to prevent future crises. He specifically cautioned non-banking financial companies (NBFCs) to remain vigilant, emphasizing the necessity of fortifying their financial foundations.

Additionally, Governor Das pointed out the results of macro stress tests, indicating that Scheduled Commercial Banks (SCBs) are expected to adhere to regulatory capital levels even under severe economic scenarios. However, he warned about the necessity of continual vigilance and proactive measures, such as strengthening infrastructure, to prevent potential crises in the banking sector.

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