The Reserve Bank of India is closely observing data as well as other macro developments and will go for another round of interest rate cut as when the situation is conducive, says Deputy Governor SS Mundra.
“We are quite clear, we are conscious. Everything will be data dependent. We will keep on observing the data and developments as they happen,” Mundra said today.
“And if the situation and all other things are conducive, RBI will take the rate action (to lower the policy rate),” he told reporters on the sidelines of a summit on Financing India’s growth organised by PHD Chamber.
The central bank does not want to keep the policy rate too high, according to Mundra.
“I think Reserve Bank, even in last policy, never said that it is our mission to keep the rate high… ,” he said.
On wholesale price index (WPI) based prices being in the negative territory for last nine months, Mundra said picking up one indicator in isolation and deriving conclusion would not probably give a meaningful picture.
“Within the normal mandate, which is given to the Reserve Bank, consumer price index has been accepted as a nominal anchor (for inflationary expectations). The CPI target has been decided within the policy framework which is 6 percent for January 2016. So I think these are the various aspects we need to look at,” he added.
The Reserve Bank has been facing pressure from various quarters to bring the repo rate down so as to reduce the cost of funds and thus thrust economic activity.
On the probable rate action by the US Federal Reserve in September, Mundra said there have been various guess work and there is no need for it as India is in a better position to deal with that.
“Whether happens in September or December or it happens thereafter that is not all that important and I think there is no need for us to guess on that.
“Whenever it happens, it will have some impact on us and other markets. But then we are relatively in a much better position to deal with that,” Mundra said.