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Nagpur: Reserve Bank Governor Raghuram Rajan on Tuesday cut the benchmark repo rate by 50 basis points to a four-year low of 6.75 per cent. Most analysts polled by Reuters expected the central bank to slash rates by 25 basis points.
Here are the highlights from Dr Rajan’s speech:
- The RBI will be accommodative to the extent possible
- January 2016 CPI target of 6% looks achievable
- Expect some rate transmission soon
- RBI has front-loaded policy action
- To start cutting SLR from January
- The global economic situation not looking good
- The economy reeling with legacy issues
- There are no silver bullets
- India can still be a country with strong growth
- Hike in foreign investment limit in bonds to be announced every March, September
- RBI pays attention to Fed stance. But it is not the central thing we look at
- Risks to inflation include weak monsoon
- The RBI and the government working hard to turn around the economy
- Transmission of rates is one of the factors we are looking at
- We need to have greater comfort on the inflation front
- Government bonds FII cap relaxation in phases
- Pay commission report to act as stimulus
- See consumer inflation moderating from here
- Inflation to stay below January 2016 target of 6% in FY16; will average 5.5% for FY17
- Capacity utilisation still very tepid. Corporate investment still weak
- Since our last policy, the conditions we had laid out were broadly met
- Reduction in banks’ deposit rates has been substantial
- 50-basis-point cut not a Diwali present
- My name is Raghuram Rajan and I do what I do
- Used maximum room given by inflation
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