New Delhi, Sep 22: Ahead of the monetary policy review next week, RBI Governor Raghuram Rajan today met Finance Minister Arun Jaitley and discussed various macroeconomic issues.RBI is scheduled to announce its policy decision on September 29 and there are expectations that it would cut the benchmark by at least 0.25 per cent as inflation is benign.
“Meeting was good and cordial. I cannot talk about the details but discussed a number of issues,” Rajan said after nearly one-hour long discussion with the minister here.It is understood that the governor discussed current macroeconomic conditions and the global economic scenario in the light of the US Fed maintaining status quo on rate last week with Jaitley. (Read: IDFC gets RBI nod for using Rs 2,500 crore reserve as provision)
Policymakers and analysts expect RBI to cut rate as US Fed decided to maintain status quo and other factors like low inflation and subdued economic growth provide room for policy adjustment.Inflation, which RBI takes into account while deciding the interest rate, has remained low for the past several months. While the wholesale price index (WPI) remained in negative territory for 10 months in a row, the retail inflation (CPI) eased to 3.66 per cent in August.
Jaitley had yesterday said that common sense says the interest rates should come down.He also said inflation is “very much under control” and the country is better prepared than most emerging economies to weather the global economic turbulence.
“Common sense says the rates should come down,” he had said.
In the last policy review on August 4, RBI had kept its policy rates unchanged because of elevated inflation level.RBI has lowered the benchmark rate by 0.75 per cent so far this year in three installments. However, two of the three rate cuts this year have been announced outside the scheduled reviews.
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