The Reserve Bank of India (RBI) may consider changing its policy course of action after the revival of economic activity shows signs of “durability and sustainability”, but it would be calibrated to not surprise the market, Governor Shaktikanta Das has said in an interview with a television channel.

       Capacity utilisation is “nowhere near pre-pandemic levels,” and there is a “slack in the economy,” the RBI Governor told CNBC Asia.

       “We are constantly monitoring the situation, and we will act at the appropriate time. At the current juncture, we feel that that appropriate time has not come,” Governor Das said, clarifying that the monetary policy committee would want the supply-side factors to correct themselves and that the authorities should take necessary corrective measures to address the issue.

       The US Fed meetings and other policy actions by central banks are being closely monitored by the RBI as that impact the domestic situation, but “our monetary policy is primarily and principally determined by domestic macroeconomic conditions,” the Indian central bank chief said.

       The RBI Governor emphasised that the central bank will not try to make any changes that would take the market by surprise.

       “All our actions will be calibrated, they will be well-timed, they will be cautious and they will keep in mind aspects like what you are mentioning. We don’t want to give any sudden shock or any sudden surprises to the markets,” he said.

       The economic recovery is “delicately poised,” and as and when the revival of economic activity shows signs of durability and sustainability, that would be an appropriate time “to perhaps consider change in our course,” Governor Das said in the interview.

       The central bank governor expects consumer demand to “increase substantially” over the current levels or “over the levels seen where the Covid impact took them down,” by the end of the year. The pandemic has dented the consumption, and the aggregate demand is “still nowhere near normal,” he said.

       The RBI Governor saw impulses of inflation as transitory and should moderate by the third quarter. The current inflation momentum is driven by supply-side factors, which are getting corrected through necessary actions by concerned authorities.

       The RBI’s endeavor will be to ensure that “inflation does not become uncontrollable,” and that it would be “dealt with.”

       The 9.5 per cent growth projection by the RBI, which is a scale-down from 10.5 per cent earlier, is “quite appropriate for the current (financial) year,” Das said in the interview.

       The RBI Governor defended the MPC’s stance in tolerating the inflation of around 6 per cent, as the flexible inflation targeting regime allowed that freedom in an extreme situation like the present pandemic period.

       The Indian central plans to start pilot projects involving central bank digital currency (CBDC) “by December or so.”

       However, on private cryptocurrencies, the central bank continues to harbour major concerns in terms of their impact on financial stability.