News Brief
RBI To Maintain Autonomy In Monetary Policy Despite US Fed Actions, Says Chief Economic Advisor V Anantha Nageswaran
Nayan Dwivedi
Nov 02, 2023, 03:27 PM | Updated 03:27 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
India's central bank, the Reserve Bank of India (RBI), is not expected to face pressure to hike interest rates in tandem with the US Federal Reserve, according to India's Chief Economic Adviser, V Anantha Nageswaran.
As per reports by Business Standard, Nageswaran highlighted that the RBI's monetary policy is not closely linked to the Fed's due to improved external finances and financial stability.
Nageswaran stated, "The RBI cycle has not been so tightly linked to the Fed cycle mainly because external finances and financial stability are much better now. If the Fed were to hike 25 basis points, or even two times, that will not put pressure on the RBI to follow suit."
While the Federal Reserve left interest rates unchanged recently, they have not ruled out the possibility of further rate hikes due to inflation exceeding its 2 per cent target and robust economic growth.
In contrast, the RBI has maintained its policy rate at 6.5 per cent for four consecutive times, indicating a commitment to tight monetary policy unless inflation aligns with its 2 per cent to 6 per cent target band.
Nageswaran emphasised that the RBI now has "some degree of freedom" thanks to strong macroeconomic fundamentals. India's economy is poised to grow over 6 per cent this year, with manageable risks associated with oil prices and weather conditions.
Addressing concerns over oil prices, Nageswaran stated, "We are well within the margin of safety on oil prices. With a decent monsoon behind us and oil well-behaved so far, there’s not much concern on the 6.5 per cent growth expectations for the current fiscal year."
Nageswaran also expressed the view that fiscal policy is unlikely to be relaxed ahead of the 2024 elections.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Nayan Dwivedi is Staff Writer at Swarajya.
Introducing ElectionsHQ + 50 Ground Reports Project
The 2024 elections might seem easy to guess, but there are some important questions that shouldn't be missed.
Do freebies still sway voters? Do people prioritise infrastructure when voting? How will Punjab vote?
The answers to these questions provide great insights into where we, as a country, are headed in the years to come.
Swarajya is starting a project with an aim to do 50 solid ground stories and a smart commentary service on WhatsApp, a one-of-a-kind. We'd love your support during this election season.
Click below to contribute.