Interest rate change talks premature: RBI Governor

New Delhi, July 11

Reserve Bank Governor Shaktikanta Das on Thursday said the question of change of stance on interest rate is quite premature given the gap between current inflation and 4 per cent target.

“Given gap between current inflation and 4 per cent target, question of change of stance is quite premature…when we move towards 4 per cent CPI (retail inflation) on a sustained basis is when we will get the confidence to think about a change in stance,” Das said in an interview to CNBC-TV 18.

He said inflation journey is progressing as per expectations, but added that it is the last mile of the journey towards 4 per cent, which will be the most difficult or sticky.

Consumer Price Index (CPI)-based retail inflation has been projected at 4.5 per cent with quarter-wise projections at 4.9 per cent in Q1 (April-June), 3.8 per cent in Q2, 4.6 per cent in Q3, and 4.5 per cent in Q4, RBI had said in its June bi-monthly report.

The Reserve Bank, which has been mandated to ensure inflation remains at 4 per cent (with margin of 2 per cent on either side), mainly factors in CPI while arriving at its monetary policy.

He had said headline inflation softened further during March-April, though persisting food inflation pressures offset the gains of disinflation in core and deflation in the fuel groups.

Despite some moderation, pulses and vegetables inflation remained firmly in double digits.