New Delhi (Sputnik) — Reserve Bank of India (RBI) Governor Urjit Patel also warned that the world is probably at the cusp of the beginning of a global currency war. Patel said this while claiming that the RBI has been taking a cautious approach against the backdrop of ongoing geopolitical risks and that it is trying very hard to maintain the country's growth rate above 7%.
"Already, we have seen the turbulence for a few months and it is likely to continue, for how long we don't know. We are possibly at the beginning of a currency war. We are running a tight ship to ensure macroeconomic stability in order to be able to maintain 7-7.5% growth rate," Patel said at a media briefing after the monetary policy announcement on Wednesday.
RBI has increased the lending rate to commercial banks by 0.25% to 6.5%; the second consecutive hike this financial year ending March 2019.
The RBI expects some moderation in the pace of exports due to trade tensions, but still projected country's growth at 7.4% for 2018-19.
"Global growth has become uneven and risks to the outlook have increased with rising trade tensions. The Chinese economy lost some pace in the second quarter, pulled down by efforts to contain debt. The Russian economy picked up in the first quarter; recent data on employment, industrial production and exports indicate that the economy has gained further momentum," RBI's policy statement reads.