File Photo: RBI Chief Raghuram Rajan
Reserve Bank Governor Raghuram Rajan on Tuesday held repo rate unchanged at 7.5 per cent, as expected. A status quo on interest rate was anticipated because Dr Rajan had earlier this year announced back-to-back repo cuts, both times outside the policy meetings. Dr Rajan addressed a press conference after the policy announcement.
Highlights
- Waiting to see transmission of interest rates
- RBI waiting for more data points
- Next rate cut will depend on effective transmission of policy stance by banks
- Timing of future cuts will depend on how much room we have
- Banks over time will be forced to match markets and bring rates down
- Just because we haven't moved on rates doesn't mean we have not moved, we have moved on a variety of dimensions
- Stance remains accommodative
- Exploring the possibility of corporates issuing rupee bonds abroad
- Must ensure small savings rate don't stand in way of banks lowering rates
- US Fed policy changes will have an impact globally but that is not our central concern
- Improved economic fundamentals will allow us to focus on domestic policy
- US Fed policy will be one factor, but not the most important factor in terms of when we move on rates again
- To issue priority sector lending norms by month end
- Allowing well managed urban co-operative banks to issue credit card
- Government is looking to address NPAs
- Our focus is undue volatility in rupee, not targeting any value
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