Rates Have Come Down But Banks Haven't Passed On: Raghuram Rajan

The Reserve Bank of India (RBI) held interest rates steady as widely expected at its policy review on Tuesday, but said it could cut interest rates by early next year depending on whether inflation eases further and on fiscal developments. RBI chief Raghuram Rajan addressed a press conference explaining its monetary policy stance. 

Highlights

• We are in discussions with government for monetary policy framework
• Government has shown willingness to keep inflation target at 4 per cent beyond FY16 with a 2 per cent band
• Hope to finalise the new monetary policy shortly
• Seeing a disinflation process underway
• We want to make sure that the disinflationary process is for real
• We don't want to flip-flop if there is a change in external environment
• There is a misconception that the RBI is not concerned about growth
• The way to sustainable growth is to have moderate inflation
• Rates have come down but banks haven't passed on
• RBI is certainly not against growth
• Bear with us, corporate India will see sustained growth for many years
• Our talks with government suggest fiscal deficit on track
• Not trying to manage long-term interest rates through open market operations
• For now, RBI has consumer inflation target of 6% by January 2016
• We want to be relatively sure we hit the 2016 inflation target
• Speeding up judicial process on debt recovery will bring down the risk premiums
• RBI in discussions with the government to speed up the debt recovery process
• Hope the performance of fixed income and equity markets will convince more investors to park their money in financial assets rather than gold

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.