Governor Shaktikanta Das said in an interview with CNBC TV18 on Monday that the Reserve Bank of India (RBI) is considering more rate hikes in the coming meetings. As well as that the central bank will also provide a revised inflation projection at its June meeting.
“Expectations for higher rates are a no brainer and policymakers are aiming to remove a liquidity overhang”. He said adding that the RBI will not allow a runaway depreciation of the rupee.
Inflation had been above the 6% upper limit for four months. Moreover, prompting the central bank to raise rates in an unexpected meeting earlier this month. RBI raised the repo rate by 40 basis points (bps) to 4.4 percent in an unexpected decision, and the MPC is expected to raise key lending rates again at its June meeting, which is planned for June 6-8.
“We have entered another phase of coordinated action between fiscal and monetary authorities to check inflation,” Das said in the interview at CNBC-TV18, adding that the measures would have a sobering impact on consumer prices.
In April, India’s retail inflation surged to an eight-year high. Staying beyond the central bank’s tolerance limit for the fourth month in a row. And is expected to continue high.
The central bank also increased the cash reserve ratio (CRR). By 50 basis points to 4.5 percent in order to remove $85,000 crore in excess liquidity from the banking system. Despite the rate hike, the monetary policy committee chose to maintain its accommodative policy stance. Thus, focusing on the removal of accommodation.