According to V Anantha Nageswaran, Chief Economic Adviser to India’s government, the Reserve Bank of India (RBI) is not expected to face pressure to increase interest rates if the US Federal Reserve proceeds with additional hikes. Nageswaran notes that the RBI’s policy cycle is not closely linked to the Fed’s cycle due to improved external finances and financial stability. Even if the Fed raises rates, the RBI is unlikely to follow suit, as India’s strong macroeconomic fundamentals provide a degree of freedom. The RBI has maintained its policy rate at 6.5%, signaling a commitment to tight monetary policy unless inflation aligns with its target band of 2%-6%
India’s Chief Economic Adviser: RBI Unlikely to Follow US Fed If Rates Rise Again
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