RBI Governnor Raghuram Rajan rules out cutting rates as WPI inflation falls to 3.74%

MUMBAI: Reserve Bank of India governor Raghuram Rajan gave the clearest possible signal that he'll keep interest rates unchanged at the month-end monetary policy announcement, just as the government announced wholesale inflation slowed the most in almost five years in August.

"Inflation is coming down,'' Rajan told a banking conference on Monday. "This is consistent with our forecast. Macro indicators are improving but still have some way to go before we can declare that we are out of  ..

"In the short run, lower oil prices are helping consumer countries like us. Typically a lower oil price means a lower current account deficit, lower oil subsidies and lower inflation," the RBI governor said. "We need to seize this moment to eliminate diesel subsidies completely... We can of course wait but the moment will leave us and we may be back to subsidising."

On September 12, the government had announced that retail inflation, the measure the central bank watches more closely,  ..

The governor has been resisting calls by companies to cut rates to give the economy a boost amid signs of growth reviving after it slumped below 5% in the past two years, hitting decadal lows. But Rajan has made clear before this that he doesn't want to make the mistake of changing the central bank's stance before inflation has been effectively quelled. The governor, who has raised interest rates thrice since he took office last September, said that if he's convinced that the target of 6% consu .. 

anand maurya

pgdm-3sem