New Delhi : Reserve Bank of India Governor Raghuram Rajan said the central bank will cut interest rate provided it feels confident that inflation will remain below 6 % even after the reduction.
RBI expects retail inflation to be around 6.1 % in January-March, 2016.
“It should be actually below that. That is what we are looking for to see how much room we have (to cut rate),” Rajan told CNBC Awaaz.
RBI maintained a status quo on policy rate, but promised that the central bank could consider a reduction in rate ahead of the September 29 policy, depending on macro economic data. He said there is perception among people that inflation is rising because of increase in prices of milk and vegetables, which is “worrying”.
Rajan also said that some progress in legislative business and further clarity on the government’s reform measures would benefit India from an external perspective.
“…It would help if we could get more clarity on some of the reform measures that are taking place because that would send a strong signal to the outside. Legislative action for example…would be very useful,” Rajan said in an interview to Bloomberg TV. On key reform areas such as the Goods and Services Tax, Rajan said these were important legislative elements and that progress on these fronts would send a strong signal that India is on the move.
