India June inflation likely to be close to 5%, cenbank governor says

Reuters
·1-min read
FILE PHOTO: Customers buy fruits and vegetables at an open air evening market in Ahmedabad

MUMBAI (Reuters) - India's retail inflation is expected to be close to 5% in June, in line with the Reserve Bank of India's expectations but still too far from its 4% target to start talking about lowering interest rates, the central bank chief said on Thursday.

The country's inflation picked up slightly to 4.8% last month from 4.75% in May, according to a Reuters poll of economists. The data is scheduled for release on Friday.

It will be too early to talk about a change in the monetary policy stance till inflation is somewhere close to the RBI's 4% target, Das said in an interview with CNBC-TV18.

The RBI kept its key rate unchanged for an eighth straight policy meeting last month. But two of six Monetary Policy Committee members voted to lower rates and Das has argued the RBI's focus needs to stay hitting its inflation target.

He reiterated the country's growth momentum continues to remain strong and that economic growth of 7.2% in the fiscal year to March 2025 was "very much achievable".

Das said India is progressing towards 8% growth and that he was very "sanguine" about the country's economic prospects.

Separately, the governor said the RBI is undertaking a study of the neutral interest rate, or the rate that would prevail when inflation is close to target and growth near its potential.

The RBI's estimate of the neutral rate is likely to be released over the next 1-2 months, Das said.

(Reporting by Swati Bhat and Dharamraj Dhutia, Writing by Ira Dugal; Editing by Janane Venkatraman and Savio D'Souza)

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