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Room for more rate cuts as government’s hands tied: RBI

PTI
Published : Sep 20, 2019, 3:29 am IST
Updated : Sep 20, 2019, 3:29 am IST

The governor was quick to add that there is little fiscal space for the government to unveil any countercyclical measures to boost the sagging growth.

Reserve Bank governor Shaktikanta Das
 Reserve Bank governor Shaktikanta Das

Mumbai: After surprising everyone with four successive rate cuts this year, Reserve Bank governor Shaktikanta Das on Thursday said “there is more room” to do so given the growth deceleration and stable inflation that is likely to stay below target for a year or so.

However, the governor was quick to add that there is little fiscal space for the government to unveil any countercyclical measures to boost the sagging growth and the only way to revive the growth engine is to front-load the budgeted capex, hinting that only an easy money policy can help salvage the situation.

Since assuming charge mid-December, the Das-led rate-setting panel has delivered four successive rates cuts, with the fourth one last month being the most surprising and unconventional one as he chose to deliver a 35 bps repo cut.

With that the RBI has delivered a cumulative 110 bps repo reduction since February, yanking down the key benchmark rate to a nine-year low of 5.40 per cent.

“When we see that the price stability is maintained and inflation is much below the 4-percent mandate and is expected to be so in the next 12 months horizon, there’s a room for more rate cuts, Mr Das said.

Tags: shaktikanta das
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