Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Interest rate cut needed to boost growth, says Montek

Dec 19 2012, 01:26 IST
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SummaryPlanning Commission on Tuesday pitched for lowering of interest rate to boost economic growth, which is beginning to look up after moderating to 5.4% in the first half of the current fiscal.

Planning Commission on Tuesday pitched for lowering of interest rate to boost economic growth, which is beginning to look up after moderating to 5.4% in the first half of the current fiscal.

"Over a longer period of time, steps are needed to bring down the interest rate. RBI looks at these things independently and we should give them freedom to decide (about interest rates)", Plan panel deputy chairman Montek Singh Ahluwalia said while commenting on Reserve Bank's mid-quarter review.

The deceleration in growth has bottomed out and the second half would be better, Ahluwalia said, adding "They (RBI) have decided to take no action. The economy is beginning to turn around. Everybody should support the revival of growth".

On the finance ministry's economic growth projection of 5.7-5.9% in its mid-year economic analysis, he said, “I don't think that this is an unreasonable forecast. That is reasonable assumption." Noting there is excessive focus on repo rate, Ahluwalia said: "I think as we bring down the fiscal deficit, resources which are flowing into the financing of fiscal deficit, will flow back into the economy.”

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