Business

RBI Governor: It’s Premature To Discuss US Recession Based On One Month’s Data

At the post-monetary policy press briefing, RBI Governor Shaktikanta Das said that GDP growth figures in the US are “doing well” and it was not right to rush to a conclusion that the country was slowly slipping into recession.

“US economy has been doing well. One can’t rush to a conclusion based on one month of unemployment data,” Das told reporters on being asked how he looked at the US recession fears that have emanated after the recent weak unemployment in the US.

Das said it would be “premature” to talk about the recession in the US.
From the RBI’s point of view, the Governor added they will be watchful of all incoming data — both from domestic and external fronts.

He reiterated that one cannot forecast the possibility of a slowdown or a recession based on one month’s unemployment data. He added one has to wait and see other data emerging from the US.

There has been a strong sell-off in the financial market, though variably, across the globe this week, including in India. The market downturn was triggered after a softer-than-expected jobs report from the United States, which revealed a rise in the unemployment rate to 4.3 per cent and a mere addition of 114,000 non-farm payroll jobs in July.

MUST READ: The United States Firmly Opposes China’s Assertion Of Arunachal Pradesh’s Territory

Unemployment and job creation data, key indicators for gauging economic health, raised alarms about a potential slowdown in the US.

Later in the press conference, responding to a question on rising futures and options trading volume in India, and fears that hard-earned financial savings are flowing into speculative activities, the Governor said, it is not as if all savings are going into F&O.

He added that the issue was discussed in the “early warning group” mechanism of the regulators.
“I am not suggesting that people should not go in equity and put their money in deposits. What I am saying is this could create a liquidity management issue for banks,” he explained.

He said he was only warning of potential liquidity risks of banks. He added banks need to capitalise on their branch network and raise deposit levels to sustain credit growth.

India’s financial market regulator SEBI has been worried about the speculative activities happening in the derivatives segment, which go against the purpose for which those asset categories were introduced.

As per definition, derivative trading is a complex financial practice that involves buying and selling contracts, called derivatives, that derive their value from an underlying asset. The underlying asset can be anything from stocks, bonds, commodities, currencies, indices, exchange rates, or even interest rates.

Meanwhile, coming back to the three-day monetary policy meeting that concluded on Thursday, the RBI decided to keep the repo rate unchanged at 6.5 per cent.

This marks the ninth consecutive time the central bank has opted for stability in its monetary policy.
The decision to keep the repo rate steady comes amidst persistent concerns about inflation, which remains above the RBI’s target range.

The central bank’s commitment to bringing inflation down to its 4 per cent target continues to face challenges due to ongoing food inflation and other economic factors.

Governor Das emphasized that the RBI remains vigilant regarding inflationary pressures and will take necessary actions to maintain price stability while supporting the country’s economic recovery.

The monetary policy committee decision reflects a balanced approach, aiming to control inflation without stifling growth.

WITH INPUTS FROM ANI

ALSO READ: Supreme Court Reserves Judgment on Manish Sisodia’s Bail Plea in Excise Policy Case

Abhay Tiwari

Recent Posts

PV Sindhu Ties The Knot With Venkata Datta Sai In Udaipur: Exclusive Details And Viral Photos Revealed

PV Sindhu married Venkata Datta Sai in a traditional ceremony in Udaipur on December 22.…

21 mins ago

PM Modi Distributes 71,000 Appointment Letter Via Video Conference

Prime Minister Narendra Modi  on Monday distributed over 71,000 appointment letters to newly appointed government…

21 mins ago

TTD Vision 2047: Big Changes Coming To Tirumala With Smart Roads And AI Chatbots – KNOW HERE!

TTD’s Vision 2047 aims to transform Tirumala into a model pilgrimage hub, focusing on smart…

33 mins ago

BJP Releases ‘Aarop Patra’ Against AAP Govt, Highlights 10 Key Issues

BJP slams AAP over corruption, pollution, and mismanagement in a new chargesheet, while AAP launches…

50 mins ago

Who Is Daniel Duggan? Ex Fighter Pilot Accused Of Training Chinese Military To Be Extradited To US

Australia's Attorney General has confirmed that Daniel Duggan, a former US Marine accused of training…

1 hour ago

Hyderabad Court Grants Bail To 6 Accused In Vandalism At Allu Arjun’s House

Six individuals who allegedly damaged actor Allu Arjun's residence in Hyderabad's Jubilee Hills were granted…

1 hour ago