Economic activity clearly losing traction: RBI governor

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National News

Jun 20, 2019

10:22PM

Economic activity clearly losing traction: RBI governor

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RBI Governor Shaktikanta Das voted for a 25 basis point cut in the interest rate in the monetary policy announced earlier this month. He believed that that Indian economy was clearly losing traction and needed a decisive monetary policy to promote growth.

According to the minutes of the meeting of the monetary policy committee, Mr. Das also favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost the growth.

On the transmission of the policy rate, the RBI Governor said it is expected to improve as banks adjust their deposit and lending rates in response to changes in the policy rate.

RBI Deputy Governor Viral Acharya expressed a dilemma wherein economic growth seemed weakened but inflation risks remained upside with a deficiency in monsoon and volatility in crude oil prices.

Another member and Executive Director Michael Debabrata Patra said it is evident that if the 2019-20 projections materialise, the MPC would have steered inflation at or below target on average for four years in a row in its five-year term of office.

Other three members, Ravindra Dholakia, Pami Dua, and Chetan Ghate had also voted in favour of reducing the key lending rate.