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Informist, Thursday, Aug 8, 2024

 

--RBI Das: India has improved resilience against external shocks 

--RBI Das: RBI will be watchful of all domestic, external data 

--RBI Das: Need to see more data on US employment 

--RBI Das: Premature to talk about recession in US 

--RBI Das: Overall US econ growth doing well 

 

MUMBAI – In light of the recent global equity sell-off owing to expectations of a potential recession in the US, Reserve Bank of India Governor Shaktikanta Das said talks about a recession in the world's largest economy are premature.

 

Addressing a post-monetary policy press conference, Das said talks of a recession or a slowdown in the US are premature as the economy continues to perform quite well. Moreover, one should not jump to a conclusion based on just one month's employment report, he said. 

 

"Overall, if you look at the economy in the US, I think it's doing quite well," the governor said. "So far as unemployment is concerned, it is just one-month data. Based on one-month data, you cannot assume or rush to a conclusion about the possibility of a slowdown or recession in the largest economy of the world. You have to wait and see the incoming data." 

 

Das also underlined the recent comments by US Federal Reserve officials. On Monday, San Francisco Fed President Mary Daly said the jobs report leaves "a little more room for confidence that we're slowing but not falling off a cliff." Chicago Federal Reserve President Austan Goolsbee cautioned against taking too much signal from the global market sell-off, saying it emanated in part from the Bank of Japan's decision last week to raise interest rates as well as increasing geopolitical tensions in West Asia. 

 

On Monday, equities across the globe declined sharply after lower-than-expected US non-farm payroll data led to fears of a potential recession in the US, coupled with market participants aggressively repricing their rate cut expectations by the US Federal Reserve.

 

The US Labor Department report last week showed that employers in the US added just 114,000 jobs in July, well below the 215,000 jobs per month added over the last 12 months. The unemployment rate in the US rose to near a three-year high of 4.3% in July from 4.1% in June. 

 

Fed funds futures traders now see a 72.5% chance of a 50-bps rate cut at the Fed's September meeting, compared with a 22% chance a week before, according to the CME FedWatch tool. 
 

The governor said the RBI will be watchful of all incoming data both from domestic and external sources and deal with all emerging situations. He also said India has improved its resilience vis-a-vis external shocks and is far more resilient than earlier.  End

 

Reported by Pratiksha

Edited by Saji George Titus

 

 

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