Exclusive | RBI not looking to raise rates to defend rupee for now, says MPC member Nagesh Kumar – CNBC TV18
MPC member Nagesh Kumar says no immediate rate hike to defend rupee, warns growth outlook has worsened, external risks and supply driven inflation rising, RBI to stay cautiousThere is no immediate case for using interest rates to defend the rupee, Nagesh Kumar, external member of the Monetary Policy Committee, told CNBC-TV18, emphasising that the policy path will be guided by evolving data amid heightened global uncertainty.
"Not at this moment, but who knows about the future. In these uncertain times, everything is determined by the forces at play at that moment," Kumar said when asked if the central bank may need to raise rates to support the currency. He added that the relationship between interest rates and the rupee was "not really" a key focus in the latest policy meeting, though it could come into consideration if conditions worsen.
His comments come as minutes of the latest MPC meeting released by the Reserve Bank of India flagged growing external risks from the ongoing West Asia conflict, rising crude oil prices and global financial volatility. Policymakers noted that these factors could pressure both growth and inflation, even as domestic economic activity remains resilient.
Kumar said the macroeconomic backdrop has shifted sharply since the February policy. "The economic outlook since the last meeting has deteriorated completely," he said, pointing to a surge in oil prices, supply disruptions in natural gas and fertilisers, and capital outflows amid global uncertainty. These pressures have weighed on the rupee, alongside a strengthening US dollar.
He cautioned that sustaining last year's 7.6% growth would be "very challenging", with the MPC already lowering its projection to 6.9% and warning of downside risks if geopolitical tensions persist. The assessment aligns with RBI Governor Sanjay Malhotra's view that while India's growth outlook remains "cautiously positive", risks are tilted to the downside.
On inflation, Kumar highlighted the risk of further price pressures if higher crude costs are passed through to domestic fuel prices, potentially triggering second-round effects. However, he underscored that the current inflation impulse is largely supply-driven rather than demand-led.
"Monetary policy is a very important tool for containing prices when there is a demand-driven shock… But currently, that is not the situation," he said, adding that supply-side measures and diversification of energy sources would be more effective in addressing such pressures.
Also Read | Inside RBI MPC Meeting: Growth, inflation concerns in focus — who said what
The MPC minutes echoed similar concerns, noting that while food inflation remains benign and core inflation contained, rising input costs and energy prices could alter the trajectory. Kumar said the next policy meeting would be "very critical", with the committee expected to closely track incoming data before deciding its course.
For now, the central bank appears inclined to stay cautious, balancing the need to support growth with emerging inflation and external sector risks, while keeping its options open in an increasingly volatile global environment.
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