Reserve Bank of India Governor Raghuram Rajan should cut the benchmark interest rate as it will help growth recover without stoking inflation, a member of the central bank’s monetary policy advisory panel said.
“I have been arguing since September that CPI inflation is firmly on a downtrend,” Arvind Virmani, one of seven external members of the panel and also a former executive director at the International Monetary Fund, said in an e-mail interview yesterday.
“The time for easing monetary policy has arrived.”
Retail inflation slowed to 5.52 percent in October, the slowest pace since the index was created in January 2012. Finance Minister Arun Jaitley said this week that growth would get a “great fillip” if the central bank lowered borrowing costs.
The next policy review is scheduled for Dec. 2. Rajan kept rates steady at 8 percent in September, citing risks from food price shocks and geopolitical developments. In doing so, he over-ruled the majority of external members of the central bank’s monetary policy committee who recommended a rate cut.
The panel is advisory in nature and the final rate decision solely rests with the central bank chief. “There is no inflation-growth trade off in Indian monetary policy at this point,” Virmani said. Easing monetary policy will facilitate a growth recovery by boosting consumer demand and investment, he said.
bloomberg.com
“I have been arguing since September that CPI inflation is firmly on a downtrend,” Arvind Virmani, one of seven external members of the panel and also a former executive director at the International Monetary Fund, said in an e-mail interview yesterday.
“The time for easing monetary policy has arrived.”
Retail inflation slowed to 5.52 percent in October, the slowest pace since the index was created in January 2012. Finance Minister Arun Jaitley said this week that growth would get a “great fillip” if the central bank lowered borrowing costs.
The next policy review is scheduled for Dec. 2. Rajan kept rates steady at 8 percent in September, citing risks from food price shocks and geopolitical developments. In doing so, he over-ruled the majority of external members of the central bank’s monetary policy committee who recommended a rate cut.
The panel is advisory in nature and the final rate decision solely rests with the central bank chief. “There is no inflation-growth trade off in Indian monetary policy at this point,” Virmani said. Easing monetary policy will facilitate a growth recovery by boosting consumer demand and investment, he said.
bloomberg.com
No comments:
Post a Comment