Policy planners show inclinations towards low interest rate

The RBI is scheduled to come out with its fourth bi-monthly policy review for the fiscal on September 29 and with uncertainty getting over with regard to the US Fed rate, the central bank may yield to the pressure of easing rates. “Obviously, all of these have to be balanced and RBI has to take its decisions”, he said. “Let us see how Governor (Raghuram) Rajan and RBI process all these factors and decide for themselves which course monetary policy should take”, he said.


Indian policymakers highlighted the resilience of Asia’s third-largest economy on Thursday, as world markets braced for what could be the first increase in USA interest rates since before the global financial crisis.

The RBI has cut interest rate by 0.75 percentage points this year in three tranches.

The US Fed kept its interest rate unchanged and said that the rate hike in the future will be “calibrated and cautious”.

“In a situation where there is turmoil nearly by the day as far as global markets are concerned, we are trying to make the fundamentals of our own economy strong so that our ability to resist these changes can substantially improve”, Finance Minister Arun Jaitley said at an event here.

Speaking about the economy in general, Sinha said the government was aiming to push the growth rate to around 8-10 percent per annum – focusing on supply-side measures rather then demand-induced steps so that cyclical issues can be avoided. The Federal Reserve will meet twice before the end of this year – once in October and then in December, and India will have to wait and see how the Fed assesses the global factors. It’s not like we got extra time with the Fed maintaining status quo. “And once that settles down, I think the Fed will have clearer sort of picture as to what they need to do”, he said.

“The government will continue to take various measures which it has been taking over last one year or so”.


Jayant Sinha, minister of state for finance, Government of India, said Thursday that an alternative way to look at how the cost of capital could be brought down would be to look at how well the financial system is working in India, which in turn is linked to the health of the Indian market as a whole.

All policy planners want low interest rate Jaitley