RBI Governor Rajan Isn't Ruling Out Future Cuts

30/08/2015 10:10 AM IST | Updated 15/07/2016 8:25 AM IST
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NEW DELHI/INDIA, 08NOV09 - Raghuram Rajan in India's Next Aspiration Session. Participants captured during the World Economic Forum's India Economic Summit 2009 held in New Delhi, 8-10 November 2009. Copyright (cc-by-sa) © World Economic Forum (www.weforum.org/Photo Eric Miller emiller@iafrica.com)

India's central bank has not said it is done with interest rate cuts and will keep a close eye on incoming data, Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday.

"We'll look at the data as it comes in and take a further view. We have not said we are finished," he said in an interview with CNBC television in Jackson Hole, Wyoming.

After cutting its repo rate by 75 basis points this year, the RBI kept the rate on hold at its last policy review, saying it wanted to monitor inflation and wait for lenders to further lower their lending rates.

RBI has cut the key policy rate thrice this year, by a combined 75 basis points. It, however, kept the rate unchanged at its monetary policy review in August.

Market expectations of another rate cut were dashed last month with the RBI chief sounding hawkish in the central bank’s annual report, which said inflation would inch up to the upper band of its comfort zone. While retail price inflation, the central bank’s gauge of price increase, dipped to a record low in July, RBI expected it to increase from September, as the effect of a favourable base waned.

“We also have inflation which other people do not have. We have cut the interest rate thrice so far this year and we are still in an accommodative mode. We will have a look at data as it comes and take a view accordingly…We have not said we are finished (with cutting rates) and we will take a view as the data allows us to do,” Rajan told CNBC on the sidelines of the Jackson Hole economic symposium of the Kansas City Federal Reserve in the US.

For January 2016, the central bank has set an inflation target of six per cent.

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