File pic of Raghuram Rajan
India's outgoing Central Bank chief Raghuram Rajan kept interest rates on hold on Tuesday (August 9) in a bid to control inflatio as a final policy review as central bank chief. In a widely expected move, the popular Reserve Bank of India governor said he would hold the benchmark repo rate, the level at which it lends to commercial banks, at 6.50 per cent.
Twenty six out of 27 economists in a Bloomberg News survey predicted the bank would hold rates, after it cut them by 25 basis points in April to their lowest level since early 2011. ‘In view of configuration of risks, it is appropriate for the reserve bank to keep the policy repo rate unchanged,’ Rajan said in a statement. Rajan has slashed interest rates over the past 18 months, but the government wanted deeper cuts, saying these would boost growth further.
India's economy expanded by 7.9 percent in the fourth quarter of 2015-16, the fastest of any major economy. The government is yet to announce a successor to Rajan, two months after he announced he was stepping down in September when his term finishes and returning to academia in the United States.
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