'There is no urgency to cut interest rates right now': IMF's Asia and Pacific director Krishna Srinivasan
Reserve Bank of India should continue to stay the course until inflation comes down, says Krishna Srinivasan, director of the International Monetary Fund's Asia and Pacific Department. In an interview with Deepshikha Sikarwar on the sidelines of the ongoing annual meeting in Marrakech, he said this is a time when you have to be conservative both on monetary side and fiscal side to bring inflation down durably to build fiscal buffers. Edited Excerpts:
There is a new geo-political crisis confronting the world. From India's point of view, what kind of impact do you see?
At this point in time, we are trying to assess the impact.
If you were to just think in terms of what could happen to oil prices, that's one factor which will affect India. We haven't done any analysis based on this new development but in general, a 10% increase in oil prices leads to a 0.15 basis points decline in global output, and a 0.4 percentage point increase in global inflation next year.
The World Economic Outlook has raised the inflation projection for India. Do you see rising crude prices posing a significant challenge?
What we're seeing is inflation in Asia, in general, and in India coming down.
We have attached an upside risk to inflation, because of commodity and oil prices. Any adverse impact on oil will have an upside risk for inflation. That's why we're saying that central banks should wait to see how inflation pans out.
It's data dependent. Until it's not durably within target, don't start, easing monetary policy. There's no urgency to cut interest rates right now, given the upside risk to inflation.
RBI's latest policy statement is seen as hawkish and it is now expected that high interest rates will remain for a longer period. What
