September 18: Pitching for an interest rate cut to boost growth, finance minister Arun Jaitley today said everyone, including policy planners, want lower rates, but emphasised he would not like to influence the RBI’s actions.
A day after the US Federal Reserve decided not to raise interest rates, minister of state for finance Jayant Sinha said on Friday that the global economy is trying to find a balance between slower economic growth in China and faster expansion in the U.S. , bringing volatility to financial markets. “RBI is well-prepared to deal with Fed rate hike and RBI governor is seized of the situation”, said Sinha adding that, “We have multiple layers of defence to deal with US Fed rate action which we have already built”. “Obviously, all of these have to be balanced and RBI has to take its decisions”, he said on the sidelines of a PAFI event here. “Let us see how the RBI processes all these factors and decides for itself”.
On the monetary policy stance, Das said that RBI will take a considered view on the monetary policy.
Economic affairs secretary Shaktikanta Das said the Fed decision to keep rates unchanged was good for emerging markets such as India and provide space for policy adjustment.
The Fed on Thursday heeded to calls from the World Bank and International Monetary Fund by deciding not to go for its first rate increase in nearly a decade, stemming outflows from emerging economies. Since then, consumer as well as wholesale price inflation has dived to record lows in August on falling global commodity prices.
Indian financial markets swooned two years ago when Ben Bernanke, the then-chairman of the Federal Reserve, flagged the possibility that the USA central bank’s aggressive policies of monetary easing would need to be wound down at some point.
The government, he said, will push ahead with its reforms agenda, resolve pending tax disputes and make fundamentals of the economy sound so that it can withstand the global turmoil. It’s not like we got extra time with the Fed maintaining status quo.
Patel predicted India’s current account deficit would be 1.5 percent of GDP this fiscal year, far from the precarious position in 2013 when the deficit brushed past 5 percent.