India’s Central Bank is in no way near reversing the record low-interest rates even when Inflation is so close. The Governor of Reserve Bank Of India (RBI), Shaktikanta Das said “We are constantly monitoring the situation and we will act at the appropriate time. At the current juncture, we feel that appropriate time has not come,”. The RBI has increased its Repo Rate for commercial banks in May 2020 and has tried getting the economy back to a normal state.
Since the year 2019, The Reserve Bank Of India has tried making many new measures and policies. New measures were introduced with hopes of boosting the economy during these hard times. Shaktikanta Das also said in an interview with CNBC that “revival of economic activity shows signs of durability, signs of sustainability, I think that should be an appropriate time for the Reserve Bank, or for the monetary policy, to think of, or perhaps consider a change in course,”. He has decided not to shift any policies without balancing the markets.
Shaktikanta Das will not be putting any sudden surprises on Indian Locals, due to inflation. In a recent Interview, Das provided the needed information about the future policies.
Last year, the country was on lockdown for most of the year. During the first Covid-19 wave, Prime Minister decided to put a lockdown on the whole country. Due to the lockdown, the economy shifted 7.3% negatively by March 31. The second wave of Corona caused RBI to earn a 1% growth rate over the expected 9.5%.
Shaktikanta Das told the media that the data shows that heavy service sectors and manufacturing sectors have increased lately. Nevertheless, the growth rate is not even close to the pre-pandemic growth rates. Das has decided to slowly increase the rates to avoid inflation in the country. According to the reports, Kerala is the most affected state by the virus and is also very close to inflation. Further, Central Banks will be advised to increase their interest rates to curb inflation. As the rising prices is a major problem in many countries. South Korea became the first country to raise interest rates during the pandemic. Huge circumstances may arise, as India is very close to Inflation.