New Delhi, May 24 : Stating that there is no room for complacency on inflation, Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said the course of monetary policy would depend upon the ground situation which would determine whether the central bank would continue to maintain a pause in the rates.
The RBI’s Monetary Policy Committee (MPC) or rate-setting panel would meet next month and review the monetary policy.
Amid signs of softening inflation, the MPC is widely expected to keep the policy repo rate unchanged.While wholesale inflation slipped into the negative zone in April, retail inflation print also dipped to 18-month low of 4.7% during this month.
The retail inflation is now below RBI’s upper tolerance level of 6%.
Speaking at the annual session of industry chamber CII, Governor Das maintained that the role of the central bank is to be proactive, exercise prudence and to act in time.
He assured that the RBI would ensure that there is sufficient liquidity in the system for sustaining economic activity.
The Governor noted that the country has sufficient forex reserves and the central bank has maintained the exchange rate of the rupee.
It was also highlighted that RBI has allowed international trade settlement in rupee in 18 countries.
On macroeconomic stability and the financial sector, the RBI Governor said that non-performing assets (NPAs) have reduced and the financial sector is resilient.
Das pointed out that there are downside risks to growth from global deceleration, the El Nino factor affecting monsoons, etc., and that all of these factors will need to be handled cautiously.