Business Other News 08 Jun 2016 RBI waits for acche ...

RBI waits for acche din

DECCAN CHRONICLE.
Published Jun 8, 2016, 12:58 am IST
Updated Jun 8, 2016, 1:03 am IST
Rates kept unchanged till monsoon movement gets clear.
RBI Governor Raghuram Rajan (Photo: AP)
 RBI Governor Raghuram Rajan (Photo: AP)

Mumbai: Reserve Bank of India governor Raghuram Rajan on Tuesday kept key policy rates unchanged as it sees an upside risk to inflation due to rising global crude oil prices. He, however, hinted at a reduction in rates, in the event of a good monsoon.

He also expressed concern over commodity prices, the implementation of the Seventh wage commission award, sticky food inflation and the upturn in the inflationary expectations of households and corporates with services inflation remaining particularly high.

 

However “unanticipated flares in food inflation” should be moderated by the above normal monsoon, along with various supply management measures and the introduction of electronic national agriculture market trading portal, he said.
Whilst demand was picking up, capacity utilisation indicators showed there was headroom for industry to keep prices down. This kept inflation projections under control, and therefore rates were left unchanged.

He reiterated that his policy stance remained “accommodative” despite uncertainties like the spike in April inflation numbers, and would monitor macroeconomic and financial developments for any further scope for policy action.

 

He retained the growth projection at 7.6 per cent as various factors like domestic growth, normal monsoon, 7th wage commission awards that would increase spending power and consumption, higher public sector capital expenditure on infrastructure projects would make up for lack of  private investment.

On banks passing on the rate cuts that had been done since last year, Dr Rajan said that they had refined the liquidity management framework which should help transmission of past policy rate reductions.

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