Subbarao hints at rate cut
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Reserve Bank Governor D Subbarao today hinted at easy monetary regime in the coming days, citing steep moderation in growth and expressing optimism that inflation will cool off from the next quarter.
"We are expecting that inflation will trend down starting the fourth quarter. As we go into our mid-quarter policy on December 18 and the quarterly policy on January 29, we will take into account the growth-inflation trajectory and calibrate our monetary policy accordingly," he told reporters after the central board meeting of RBI.
He, however, said 7.5 per cent inflation is still high, though it has come down from its peak.
He said, "Growth has moderated certainly. Growth has come down from 8.5 per cent and 6.5 per cent in the last two years respectively to 5.5 per cent and 5.3 per cent (in the last two quarters)."
RBI is always trying to manage the balance between growth and inflation, he said, adding that fall in growth to 5.3 per cent in the last quarter is a steep moderation.
The headline inflation was 7.45 per cent in October. At the last credit policy announcement on October 30, RBI had left the key rates unchanged at 8 per cent.
Subbarao, at a meeting of RBI board, also said that the it had asked the state governments to check chit funds operating under the banner of multi-level marketing companies.
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