Situation in Europe can derail the global economy: Shaktikanta Das

The Governor of Reserve Bank of India (RBI) Shaktikanta Das on Friday kept the repo rate unchanged at 4 per cent and announced it after deliberations of the Monetary Policy Committee (MPC), which began on Wednesday. The reverse repo rate has also been kept unchanged at 3.35%.

The RBI Governor referred to the importance of the two warring nations—Ukraine and Russia—in supply of key raw materials, which had rattled commodity markets.

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“While the pandemic quickly morphed from a health crisis to one of life and livelihood, conflict in Europe has the potential to derail the global economy… Caught in the cross-currents of multiple headwinds, our approach needs to be cautious but proactive in mitigating the adverse impact on India’s growth, inflation and financial conditions,” Das said during the announcement.

Also read: RBI Monetary Policy Committee keeps repo rate unchanged at 4%

In his remarks, Das noted the “humongous” challenges posed by the war in Ukraine and the resultant impact of sanctions on Russia.

Earlier this month, former RBI Governor Raghuram Rajan said that Russia’s unprovoked attack on Ukraine, with its scenes of Ukrainian civilians being murdered or driven from their homes as refugees, undoubtedly had to be opposed.

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The former RBI Governor further went on to say that Russia, an economic midget relative to its military power, may still lash out by expanding the range of military weapons it uses and the territories it targets. It is a risk the world has to take.

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“Compared to Russia’s indiscriminate bombing, economic weapons will not kill people as quickly, create as much visible destruction or inspire as much fear. But the unprecedented economic weapons that have been deployed against Russia will be unquestionably painful,” Rajan said.

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Across Ukraine, people are grappling with the realities of Russia’s brutal invasion — tending to the deceased, feeding the hungry and preparing for the next phase of a war that shows no sign of letting up.

Russian troops retreating from cities surrounding Kyiv left behind crushed buildings, destroyed cars and starving families — images that helped explain Ukrainian leaders’ desperate pleas for more Western help to halt Moscow’s next offensive.