India’s process of lowering inflation is “likely to be slow and drawn out,” and the central bank may not reach its 4% goal until the middle of the next decade, said Shaktikanta Das, governor of the Reserve Bank of India, on Tuesday.
“The cumulative effect of our monetary policy actions over the last year is still unfolding and has yet to fully materialise,” Governor Das said at an event hosted by Central Banking magazine in London. He also said that the RBI’s price gain forecast of 5.1% for the current financial year is well above its goal.
India’s rate-setters met last week for the second time in a row and didn’t change the benchmark repo rate. They kept saying that inflation needs to stay near the middle of its 2%–6% range for a long time.
Das said that the MPC didn’t give any future advice on when and how high the final rate would be because guidance during a rate-tightening cycle was “risky.”
The central bank of India thinks that the country will grow by 6.5% in the current fiscal year. Das said that the government’s continued focus on capital spending is making more room for growth and encouraging private investment. Additionally, he claimed that strong domestic demand—particularly from private spending and investment—helped the economy.
