With price stability in sight, RBI guv says focus is on chasing growth
The RBI Guv said the headline inflation will be contained near the mandated 4 per cent target.
NEW DELHI: In a clear hint that RBI is focussing more on addressing growth issues, Governor Shaktikanta Das on Thursday said it was time to act decisively to foster economic growth.
Das, who himself voted for a rate cut at the MPC where Deputy Governor Viral Acharya and Chetan Ghate voted against it, said the fall in inflation has opened up space for a rate cut.
In a major U-turn, the central bank on Thursday cut the repo rate by 25 basis points in first cut since August 2017, bringing it down to 6.25 per cent. RBI also changed its policy stance to ‘neutral’ from ‘calibrated tightening’.
“A shift in RBI policy stance to ‘neutral’ also provides flexibility to meet growth challenges,” Das said, adding that RBI was determined to focus on growth after achieving price stability.
The Central Statistical Office (CSO) has estimated GDP growth for FY19 at 7.2 per cent and for FY20 at 7.4 per cent. GDP is projected to expand 7.2-7.4 per cent in the first six months of next financial year and 7.5 per cent in Q3, with the risks evenly balanced.
The RBI Governor said the headline inflation will be contained near the mandated 4 per cent target. The government’s open market operation and liquidity infusion would depend on the evolving situation, Das said. “Based on requirement, RBI will make sure there is no scarcity of liquidity,” Das said.
On dividend payment to government, the governor said the quantum will be decided by RBI’s central board.
Das, who himself voted for a rate cut at the MPC where Deputy Governor Viral Acharya and Chetan Ghate voted against it, said the fall in inflation has opened up space for a rate cut.
In a major U-turn, the central bank on Thursday cut the repo rate by 25 basis points in first cut since August 2017, bringing it down to 6.25 per cent. RBI also changed its policy stance to ‘neutral’ from ‘calibrated tightening’.
“A shift in RBI policy stance to ‘neutral’ also provides flexibility to meet growth challenges,” Das said, adding that RBI was determined to focus on growth after achieving price stability.
The Central Statistical Office (CSO) has estimated GDP growth for FY19 at 7.2 per cent and for FY20 at 7.4 per cent. GDP is projected to expand 7.2-7.4 per cent in the first six months of next financial year and 7.5 per cent in Q3, with the risks evenly balanced.
The RBI Governor said the headline inflation will be contained near the mandated 4 per cent target. The government’s open market operation and liquidity infusion would depend on the evolving situation, Das said. “Based on requirement, RBI will make sure there is no scarcity of liquidity,” Das said.
On dividend payment to government, the governor said the quantum will be decided by RBI’s central board.
