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RBI acted ahead of time in reducing policy rates: Shaktikanta Das

Date: 17-12-2019
Subject: RBI acted ahead of time in reducing policy rates: Shaktikanta Das
The Reserve Bank of India Governor Shaktikanta Das on Monday said the monetary policy committee had acted ahead of time to cut policy rates as it had anticipated the slowdown. While speaking at the Times Network India Economic Conclave 2019, Das also underscored that he hopes to be proven right on the latest pause in monetary policy rates.

“With regard to RBI, we’ve acted a little bit ahead of time in terms of reducing our policy rates,” Das said. “As early as February this year, the RBI saw that there is a growth slowdown. We saw that a momentum for slowdown is building up, so we started cutting rates this year. That time the market thought that the RBI had surprised it by going for a rate cut. But I think it was a timely action.”

The RBI Governor also said he was surprised by the market reaction over his rate pause in the latest policy announcement.

“In the last MPC meeting when we took a pause, I don’t know why the market said that they were surprised,” he said. “I was told that the markets were surprised but subsequently I’m happy and thank all of you for accepting that it was a right call to take. I do hope that the events will unfold in a manner which will prove that the MPC decision was right.”

In his fifth bi-monthly monetary policy address on December 5, Das chose to keep the policy rate unchanged while awaiting the transmission of the 135 basis point cumulative repo rate reduction during February-October 2019 to bank lending rates.

Since then, State Bank of India, Bank of Baroda and Bank of India have cut their lending rates further by 10 basis points.

Das also called for a coordinated policy effort among all advanced economies to prop the global economy out of a slowdown glut. The Governor said he hoped that among all the economic uncertainty, the US-China truce on trade talks will not be reversed.

Das added that RBI's mandate is financial and price stability while keeping growth into consideration. He said there is significant evidence of deleveraging taking place across corporate India, banks and non-bank lenders and there was need to push free capital back into the investment cycle.

Source: economictimes.indiatimes.com

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