New Delhi : Reserve Bank Governor Urjit Patel- led Monetary Policy Committee (MPC) on Tuesday began its bi-monthly interest rate review amid the government pitching for a reduction in borrowing cost to help push private investments.
Most analysts, however, expect no change in interest rates in view of more than $60 billion of excess liquidity in the system.
Those seeking a cut in interest rates cite consumer price inflation slowing down to 2.99 per cent in April, economic growth during the last fiscal at its slowest pace in two years and weakest loan demand since at least 1992. Finance Minister Arun Jaitley on Monday made a case for cut in interest rates, saying inflation has been under control for long and is likely to remain so on the back of good monsoon while there is no likelihood of a spike in oil prices. “…growth and investment need to improve. These are indicators which are available. Any finance minister under these circumstances would like a rate cut, the private sector would like a rate cut. But then when you entrusted it with the MPC, I would rather wait for their decision,” he had said. India Inc is also pitching for a rate cut to boost GDP growth that fell to 7.1 per cent in 2016-17 from 8 per cent in the previous fiscal.
However, financial sector experts believe the Reserve Bank will likely maintain status quo at its second bi-monthly monetary policy review of the current fiscal to be unveiled on Wednesday as the central bank would like to gauge the impact of GST rollout on inflation.
