The RBI keeps the repo rate at 6.5%, with Governor Das warning that premature cuts could be risky amid global uncertainty, despite calls for easing monetary policy
Despite inflation cooling, the RBI expects consumer price index inflation to remain elevated, driven by food prices
Governor Das emphasised that the RBI doesn’t target a specific exchange rate but intervenes to control excess volatility
The RBI's intervention has reduced volatility, but sustained efforts risk overvaluing the rupee. The REER showed the rupee was 5% overvalued in August, down from 7% in July
Sustained rupee overvaluation may impact India's competitiveness and exports. The RBI must manage volatility without creating an unintended policy bias that hampers growth
The RBI's selective intervention is key to balancing volatility control and rupee valuation, helping India safeguard competitiveness and ensure long-term sustainable growth