Kolkata: The reserve Bank of India Should ‘pause and think’ if it can continue to mirror US Federal Reserve ‘stroke-by-stroke’ terms rate hike or separating from the US central bank, State Bank Of India Group Chief Economic Advisor Soumya Kanti Ghosh Said.
Ghosh said he doesn’t see an end to the Fed’s rate hike cycle in the near term, which makes a case for the RBI to consider disengaging.
“My point is can we match Fed stroke with stroke? At some point we need to stop and think whether the effect of earlier rate hikes (by RBI) has trickled down in the system… I don’t Fed If we see an end to the cycle any time soon, it could be three or more rate hikes,” Ghosh said.
He was speaking at a session organized by the India Chamber of Commerce here.
In January 2023, the country’s inflation rises to 6.52 per cent, which is above the RBI’s tolerance level of 6 per cent. This comes after inflation remained above 6 per cent for 10 of the twelve months in 2022. Most economists believe the RBI will hike rates to bring down inflation, which has been fueled by food prices in the recent past.
The US Federal Reserve has also been raising rates and has in fact been more aggressive than the RBI, raising policy rates by 4.5 per cent since March 1 last year.
“If you look at the 2008 cycle, you will see that central banks raised rates, but when they cut rates, they did so based on country-specific factors… RBI needs to think Whether we can break away from the Fed or see whether we are in sync with them,” Ghosh told PTI on the sidelines of the event.
He said that RBI has increased interest rates by 250 basis points since May 2020 and the cycle is still going on. Right now the repo rate is 6.50 percent.
“We need to make sure that there is an end to this rate hike cycle and it has to be based on the data, otherwise at some point it could hurt.” India’s Economic Reformssaid the senior SBI official.
On speculation about a possible global recession and its impact on India, Ghosh said that in such a situation there is talk of a slowdown in exports, but a recent SBI report suggests otherwise.
He said the study took into account 19 export items, and found 14 of these to be “macro-agnostic” (agnostic to the global trade cycle).
Ghosh said, “This indicates that even if global growth declines, exports will not decline significantly… One reason for this is that agricultural exports, which are generally not sensitive to global factors, have picked up.” Is.”
Ghosh said he doesn’t see an end to the Fed’s rate hike cycle in the near term, which makes a case for the RBI to consider disengaging.
“My point is can we match Fed stroke with stroke? At some point we need to stop and think whether the effect of earlier rate hikes (by RBI) has trickled down in the system… I don’t Fed If we see an end to the cycle any time soon, it could be three or more rate hikes,” Ghosh said.
He was speaking at a session organized by the India Chamber of Commerce here.
In January 2023, the country’s inflation rises to 6.52 per cent, which is above the RBI’s tolerance level of 6 per cent. This comes after inflation remained above 6 per cent for 10 of the twelve months in 2022. Most economists believe the RBI will hike rates to bring down inflation, which has been fueled by food prices in the recent past.
The US Federal Reserve has also been raising rates and has in fact been more aggressive than the RBI, raising policy rates by 4.5 per cent since March 1 last year.
“If you look at the 2008 cycle, you will see that central banks raised rates, but when they cut rates, they did so based on country-specific factors… RBI needs to think Whether we can break away from the Fed or see whether we are in sync with them,” Ghosh told PTI on the sidelines of the event.
He said that RBI has increased interest rates by 250 basis points since May 2020 and the cycle is still going on. Right now the repo rate is 6.50 percent.
“We need to make sure that there is an end to this rate hike cycle and it has to be based on the data, otherwise at some point it could hurt.” India’s Economic Reformssaid the senior SBI official.
On speculation about a possible global recession and its impact on India, Ghosh said that in such a situation there is talk of a slowdown in exports, but a recent SBI report suggests otherwise.
He said the study took into account 19 export items, and found 14 of these to be “macro-agnostic” (agnostic to the global trade cycle).
Ghosh said, “This indicates that even if global growth declines, exports will not decline significantly… One reason for this is that agricultural exports, which are generally not sensitive to global factors, have picked up.” Is.”
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