Washington : Reserve Bank of India (RBI) Governor Raghuram Rajan has not ruled out cutting interest rates in India for a fourth time, admitting that the world’s central problem is continued slowing economic growth.
“We’ll look at the data as it comes in and take a further view. We have not said we are finished,” he said in an interview with CNBC television in Jackson Hole, Wyoming, where he’s attending an economic symposium.
After cutting its repo rate by 75 basis points this year, the RBI kept the rate on hold at its last policy review, saying it wanted to monitor inflation and wait for lenders to further lower their lending rates.
The RBI, Rajan said, has reached an agreement with the government on a new monetary policy committee that largely meets the goal of transitioning from a system where the governor alone is responsible for decisions in order to insulate it from outside pressure, he said.
“The shape of the committee that we’ve agreed to with the government… the government is going to announce this … does do a lot of this,” he said. The agreement on the new rate setting panel was different from a proposal circulated in July that would allow the government to appoint the majority of members.
“There’s an agreement with the government, which is not that plan,” Rajan said. He didn’t give more details.
He also cautioned the US federal reserve on going ahead with a rate hike, especially at a time when world economic growth is stalling which has led to massive volatility in currency, equity and commodity markets.
“My position over time has been don’t do it when the world is in turmoil,” Rajan told CNBC. “It’s a long anticipated event, it has to happen sometime…everybody knows it has to happen..but pick your time.”
