Das Says RBI Is Committed To Fighting Inflation, But Rate Hikes Will Not Be Endless

"Inflation is generalised, persistent and is here to stay, but the Reserve Bank of India will not use excessively harsh measures to restrain prices," RBI Governor Shaktikanta Das told the Economic Times in an interview.

• "The Monetary Policy Committee will increase interest rates to contain inflation, but the objective is to ensure that the market doesn't get any shocks and that growth revival is not derailed. Further, rate hikes need not necessarily be endless as recent reduction in fuel taxes and ban on exports of some commodities may have a positive impact in bringing down price pressures and the geopolitical situation may also turn helpful. We are committed to containing inflation. At the same time, we have to keep in mind the requirements of growth. It can't be a situation where the operation is successful, and the patient is dead."
• Asked about the market's obsession with the repo rate being raised to 5.15%, Das replied: "you can't precisely pinpoint that it will be 5.15%. What we have said is we would like to return to the pre-Covid situation - in terms of growth, repo rate, and liquidity. It is not possible to be precise. It can be lower or higher."
• On the supposed divergence in the RBI's approach to approach to interventions in the currency and bond markets (i.e. targeting specific yield levels, without targeting specific exchange rate levels), Das noted that "both in the currency and bond markets, we don't like runaway prices. In the currency market, we don't like runaway depreciation and in the bond market, we would not like a runaway increase in yields in G-Secs."
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