Reserve Bank of India (RBI) Governor Shaktikanta Das has said that recent US unemployment data should not be interpreted as an indication of an impending recession. Addressing the media after the Monetary Policy Committee (MPC) meeting, Das emphasized that it is too early to discuss a potential recession in the United States, the world's largest economy.
Das remarked, "It is premature to talk about a recession in the United States. The RBI will closely monitor all incoming data, both domestic and international, and respond to emerging situations accordingly."
He highlighted India's improved resilience to external economic shocks, noting that the country is better equipped to handle global uncertainties than in the past. Das added, "We will wait for further data and address the situation as it develops."
Despite recent fears of a US recession following disappointing job creation figures, the RBI governor reassured that the US Federal Reserve's actions do not influence RBI's policy decisions. Market concerns intensified when Federal Reserve Chairman Jerome Powell's forecast suggested up to three interest rate cuts this year, far exceeding previous investor expectations. Similarly, the European Central Bank had already begun reducing rates due to significant economic slowdowns in the Euro area.
Das maintained that it is premature to conclude a recession based on a single month of data. He stressed the importance of not rushing to judgments about the economic health of the world's largest economy.
Regarding India's monetary policy, the RBI MPC decided to keep the repo rate steady at 6.5% for the ninth consecutive time. The inflation forecast for the fiscal year 2024-25 remains at 4.5%, despite concerns over food price fluctuations and geopolitical tensions affecting crude oil prices. The inflation projections for the second, third, and fourth quarters of the fiscal year are set at 4.4%, 4.7%, and 4.3%, respectively, adjusted from previous estimates.
The RBI also expects the Indian economy to grow at 7.2% for the fiscal year, though the growth forecast for the first quarter has been slightly reduced to 7.1%. The outlook for the subsequent quarters remains unchanged.
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