More OMOs if required: Gokarn

Gokarn added RBI felt a cut in cash reserve ratio was not required at the current juncture.

“Currently, LAF borrowings are largely the results of build up of government cash balances following the advance tax collections. Based on that we felt that a permanent measure as a CRR cut was not warranted at this point,” said Gokarn on the sidelines of an event.

Banks' borrowings from the central bank's repo tender hit a nine-month high of R1.5 lakh crore on Monday, raising hopes of a cut in the CRR. Gokarn said the current trajectory of inflation has reinforced the likelihood of a repo rate cut in January.

“Our guidance in October was based on the projection saying inflation would go up a bit in Q3 and start easing in Q4. The two numbers we have had since the october review have actually come below our projections,” he said.

The deputy governor said the government's recent measures to curb fiscal decifit augurs well for the inflation trajectory and for investment.

“These are all very positive for providing stimulus for investment over the next few quarters,” said Gokarn.

When asked whether the high consumer price inflation remains a concern, Gokarn said the new combined CPI does not have enough history to be used as a benchmark, although it would be one of the many indices of inflation

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