economy | IST

RBI's rate narrative will shift in Dec 2021 or Feb 2022, says SBI’s Soumya Kanti Ghosh

Mini

“Our belief is that possibly towards the second half of the year and maybe in the December 2021 policy or February 2022 policy there could be a shift in the narrative,” said Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India (SBI), in an interview with CNBC-TV18.

The Monetary Policy Committee's (MPC) meeting on June 4 ended with the RBI saying "no rate action and accommodative stance for as long as necessary to revive and sustain growth."
On June 14, consumer price inflation (CPI) for the month of May came at 6.3 percent. The MPC is mandated to keep CPI at 4 percent plus or minus 2 percent -- that is within the 2 to 6 percent range.
On June 18, the minutes of MPC meeting were released and at least 3 members -- Ashima Goyal, Mridul Saggar and J Verma -- had said that they were okay with the accommodative stance because inflation, if not at the 4 percent target, is still below 6 percent.
However, now it is not at 6 percent and, according to the economists, it is expected to cross 7 percent in June or July.
“Our belief is that possibly towards the second half of the year and maybe in the December 2021 policy or February 2022 policy there could be a shift in the narrative,” said Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India (SBI), in an interview with CNBC-TV18.
“In terms of RBI cycle, I don’t think RBI is currently looking into changing the stance or tightening the mode of reverse repo at any point during this year,” he added.
According to him, RBI could strike a sound of caution in the August 2021 policy because the July numbers are also expected to be unpleasant.
“It remains to be seen how RBI narrative changes. As of now, the RBI could hold the fort but it could sound a note of caution in the forthcoming policy if the number in July is also on the higher side,” Ghosh mentioned.
On CPI projection, he said, “We are tad over 6 percent. Our full fiscal year average is at 6.1 percent and for core CPI we are at 6.4 percent.”
For the full interview, watch the accompanying video.
next story

Market Movers

Currency

CompanyPriceChng%Chng