The Reserve Bank of India (RBI) is seeing an uncertain near-term outlook for the economy, and would take more measures to follow up on last weekend's policy rate cuts as would be required to boost the economy, according to RBI Governor Duvvuri Subbarao.
“This is a significant crisis and needs significant steps,” Subbarao told reporters in Kolkata after a meeting of the central bank’s board, adding there was a need for firm fiscal and monetary steps.
The central bank would also work to minimise the stress on the economy and the sharp fall in inflation would be a consideration at the next scheduled policy review on January 24, he said.
Inflation rate fell to an 8-month low of 8.0 per cent at end-November, the government said on Thursday.
The RBI board approved lines of credit amounting to Rs 9,000 crore to the National Housing Bank (NHB) and Export-Import Bank of India to stimulate the housing and export sectors.
Subbarao said a refinance facility amounting to Rs 4,000 crore would be given to NHB, while a Rs 5,000 crore facility would be extended to Exim Bank at 7.5 per cent.
The RBI board also took a decision to help the the housing sector, which has been adversely affected by the recent financial markets developments, with the focus on cheaper rates for smaller loans.