Describing the decision of the US Federal Reserve to maintain status quo a ‘non-event’, NITI Aayog Vice-Chairman Arvind Panagariya expressed the hope that RBI will cut interest rate by 0.5 per cent in its policy review later in the month.
“In a sense, the announcement (by US Federal Reserve) was a non-event. Since people were expecting there to be rate hikes, the news of unchanged interest rates has brought a positive response in the market.
“I anticipate that there is a possibility of the RBI cutting interest rates in India, given this positive scenario,” he said.
The US Federal Reserve last night kept its interest rate unchanged and said that the rate hike in the future will be “calibrated and cautious”.
Panagariya said RBI may cut interest rate by atleast 0.5 per cent in the bi-monthly monetary policy as inflation is low.
“In my opinion, we will see at least a 50 Basis Points or 0.50 per cent cut in interest rates. But ultimately, the decision lies with Governor Rajan. I think it is necessary to cut rates in order to really stimulate growth,” Panagariya told CNBC Awaaz.
The national economy, he said, is now in good condition to cut rates and there is likely to be a fall in interest rates.
RBI had cut interest rate by 0.75 per cent this year in three tranches. However, it refrained from reducing the rate further in the last bi-monthly monetary policy in August.