Mumbai: Shaktikanta Das: There seems to be a mismatch between the situation in the domestic stock market and the real situation of the economy. Hence the stock market will decline. Reserve Bank of India (RBI) Governor Shaktikanta Das said this on Friday.
In a CNBC Voice interview, Shaktikanta Das said, “There is too much liquidity in the global economy and the system. That is why the stock market is so fast. Surely it is different from the real economy.” He said that there will definitely be a fall in the stock market, but we cannot tell when this decline will occur.
Since April, the Nifty 50 index has risen 37.1 percent and the Sensex has risen 35.2 percent. In its credit policy this month, the RBI did not change the interest rate due to rising inflation. But, after the monetary policy, Shaktikanta Das had said that there is scope left with the central bank. He will use it when needed.
The RBI has reduced the repo rate by 1.15 percent since February. Last year he reduced it by 1.35 percent. Shaktikanta Das said that we have scope left at the level of policy. We have to keep our weapon ready and use it in future.
Minutes of the meeting of the Monetary Policy Committee in the first week of this month were released on Thursday. This shows that the central bank does not see the need to reduce the interest rate in the current situation. Retail inflation rose to 6.09 percent in June. This is more than the range of 2 to 6 percent of RBI. This is the reason why the central bank did not reduce the interest rate.
If the rate of inflation exceeds the RBI’s target for three consecutive quarters, it has to give clarification to the government about it. The corona virus has had a great impact on the economy. Due to this, the RBI is expected to witness a major reduction in GDP in the first half of this financial year.
Das said, “There will be a recovery in the economy in the second half of this financial year. But the annual figures of economic growth will be negative.” However, he did not express a definite estimate, given the uncertain economic margin.
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