Repo Rate Cut by 35 bps: Key Statements Made by RBI Governor Shaktikanta Das
RBI governor Shaktikanta Das, in his interaction with the media after the policy meeting, made quite a few interesting statements, giving an insight into the central bank’s priorities and challenges going ahead.
File photo of RBI Governor Shaktikanta Das.
The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) cut the benchmark repo rate by 35 basis points to 5.4% in its August policy review on Wednesday, while maintaining an ‘accommodative’ stance. RBI governor Shaktikanta Das, in his interaction with the media after the policy meeting, made quite a few interesting statements, giving an insight into the central bank’s priorities and challenges going ahead. Take a look at some key excerpts from Shaktikanta Das’s conversation with journalists:
On interest rates
— Rate increase is off the table
— There is no proposal for a CRR (cash reserve ratio) cut at present
— Linking interest rate to an external benchmark is still under discussion
On the unconventional 35 basis points cut
— There was nothing sacred about multiples of 0.25 percentage point cuts
— The decision has not been taken on gut feel but on hard data
— Cutting repo rate by 25 bps was inadequate, while a 50 bps cut would have been excessive
— Too much should not be read into it, it is a judgement call which the MPC has taken
On growth and inflation
— The growth slowdown is not structural but cyclical
— This is not the time to look at real inflation, but to fill the output gap
— Confident of credit demand picking up and growth reviving
On banks and NBFCs
— We expect higher transmission of policy rates by banks in the coming weeks
— The system is ‘flushed’ with liquidity and hence the cycle of transmission by banks has begun
— RBI cannot tell banks who to lend to, but the banking regulator will ensure a good credit flow
— There is no cartelisation by banks in holding on to higher lending rates
— RBI’s endeavour is that none of the large non-banking lenders collapses
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