Published On : Tue, Sep 29th, 2015

Highlights from Dr Rajan’s speech Says 50-Basis-Point Cut Not a Diwali Present

raghuram-rajanNagpur: Reserve Bank Governor Raghuram Rajan on Tuesday cut the benchmark repo rate by 50 basis points to a four-year low of 6.75 per cent. Most analysts polled by Reuters expected the central bank to slash rates by 25 basis points.

Here are the highlights from Dr Rajan’s speech:

  • The RBI will be accommodative to the extent possible
  • January 2016 CPI target of 6% looks achievable
  • Expect some rate transmission soon
  • RBI has front-loaded policy action
  • To start cutting SLR from January
  • The global economic situation not looking good
  • The economy reeling with legacy issues
  • There are no silver bullets
  • India can still be a country with strong growth
  • Hike in foreign investment limit in bonds to be announced every March, September
  • RBI pays attention to Fed stance. But it is not the central thing we look at
  • Risks to inflation include weak monsoon
  • The RBI and the government working hard to turn around the economy
  • Transmission of rates is one of the factors we are looking at
  • We need to have greater comfort on the inflation front
  • Government bonds FII cap relaxation in phases
  • Pay commission report to act as stimulus
  • See consumer inflation moderating from here
  • Inflation to stay below January 2016 target of 6% in FY16; will average 5.5% for FY17
  • Capacity utilisation still very tepid. Corporate investment still weak
  • Since our last policy, the conditions we had laid out were broadly met
  • Reduction in banks’ deposit rates has been substantial
  • 50-basis-point cut not a Diwali present
  • My name is Raghuram Rajan and I do what I do
  • Used maximum room given by inflation