RBI policy: Six things RBI governor Raghuram Rajan said in the presser today

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New Delhi | June 07, 2016 1:13 PM

Reserve Bank of India Governor Raghuram Rajan on Tuesday maintained status quo on key rates in its bank’s bi-monthly monetary policy review.

Raghuram Rajan cited higher upside risks to’inflation trajectory’ for keeping the rates unchanged, but said the central bank will remain accommodative provided data are supportive. (Reuters)Raghuram Rajan cited higher upside risks to’inflation trajectory’ for keeping the rates unchanged, but said the central bank will remain accommodative provided data are supportive. (Reuters)

Reserve Bank of India Governor Raghuram Rajan on Tuesday maintained status quo on key rates in its bank’s bi-monthly monetary policy review.

Raghuram Rajan cited higher upside risks to’inflation trajectory’ for keeping the rates unchanged, but said the central bank will remain accommodative provided data are supportive.

Below are six things Raghuram Rajan said in the presser today:

1) When asked whether Raghuram Rajan will continue to be the governor of the RBI, he said that he can’t spoil the fun that the press is having on speculation of him continuing as RBI governor, with a smile on his face.

2) Terming the the stance of monetary policy as accomodative, Raghuram Rajan pressed that inflationary pressure remains a concern. Accordingly, Rajan retained the short-term lending rate at 6.5 and the cash reserve requirement of banks at 4 per cent. “The inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain… rising crude prices and implementation of the seventh pay commission awards being the key risks,” Rajan said in the second bimonthly monetary policy for the current fiscal.

3) On the liquidity front, which has been concern for the banks and industry for quite some time, he said RBI will continue to provide liquidity as required but progressively lower the average ex ante liquidity deficit in the system from 1 per cent of NDTL to a position closer to neutrality.

4) On gathering growth steam, he said there are signs that corporate performance is improving and available information on the march quarter earnings suggests double digit growth in pre-tax profit levels for non-financial corporates.

The RBI’s latest rounds of forward looking surveys indicate an improvement in the overall business situation, driven by a pick-up in capacity utilisation and in order books – both domestic and external.

5) We have no desire to move Rupee in any direction, said Rajan. He even added that Dollar can’t be taken for granted.

6) We need to do a lot more on Pradhan Mantri JanDhan a/cs, make lending to small enterprises more effective, said the RBI Governor.

RBI credit policy June 2016: Full coverage

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