New Delhi: After the relief from inflation in America, the way for reduction in interest rates has almost become clear. It remains to be seen how much the Federal Reserve cuts the policy interest rates. Inflation seems to be under control in India, but it is not yet clear whether the Reserve Bank will make borrowing cheaper by cutting the policy interest rates or not.

RBI Governor Shaktikanta Das has expressed happiness over the reduction in inflation. However, he also said that there is a need to focus on inflation now. In a keynote address at the Future of Finance Forum 2024 organized by the Bretton Woods Committee, Das said, "Inflation was at 7.8 percent in April 2022, from where it has come down to around the target of 4 percent. But, we still have a long way to go and we cannot afford to look the other way."

RBI's projections indicate that inflation will moderate from 5.4 per cent in 2023-24 to 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26. The governor further said that while global economic activity and trade have largely weathered downside risks, containing inflation has proven challenging, raising risks to financial stability.

Das said, "The pace of global inflation is slowing down. This requires caution in easing monetary policy." He said that monetary policy management by central banks should be prudent. The government also has to be vigilant on the supply front. Das said that market expectations of rate cuts are now gaining momentum. Especially after signals of policy change from the US Fed.

The RBI Governor said that there are also many central banks that are naturally and justifiably against prematurely easing policy before inflation is fully contained in their countries. The RBI Governor said that the central banks of these countries need to monitor their domestic inflation-growth balance and make policy choices.

From the stance of the RBI governor, it seems that the central bank's focus right now is on reducing inflation. In such a situation, it is possible that the RBI may refrain from cutting the policy interest rates for the time being.