The RBI on Tuesday cut its key interest rate by half a percentage point, double of what was broadly anticipated. This is the biggest cut in more than three years, with the RBI aiming to spur economic growth as inflation cooled to the lowest since November. The reduction in the repo rate to 6.75% was the fourth rate cut this year.
At the press conference, called to announce the fourth bi-monthly monetary policy, Rajan’s answers were to-the-point, stylish and witty. Here are five quotes from the presser.
On being asked if his views on inflation are ‘hawkish’:
“I don’t know what you want to call me... Santa Claus... you want to call me hawk, I don’t know. I don’t go by this. My name is Raghuram Rajan and I do what I do.”
On why RBI cut interest rate by 0.50%:
“We want to make sure that the words sustainable and growth go together. Both are important. And that’s why we used what room we had. But I don’t think we were excessively aggressive. We were not throwing out a Diwali bonus.”
On the struggling economy:
“The economy has legacy problems and there are no silver bullets.”
Going into growth and prices, Rajan’s assessment was mixed:
“Since our last review, the bulk of our conditions for further accommodation have been met. The January 2016 target of 6-percent inflation is likely to be achieved,” he said. But he was worried over growth and wanted structural reforms and corporate action to address this issue.
On RBI’s support for India Inc’s pleas:
“While the Reserve Bank’s stance will continue to be accommodative, the focus of monetary action for the near term will shift to working with the government to ensure that impediments to banks passing on the bulk of the cumulative 125 basis points cut in the policy rate are removed.”
(with inputs form Reuters, IANS and PTI)