RBI Saw Slowdown, Acted Ahead Of Time By Cutting Rates: Shaktikanta Das
RBI Governor Shaktikanta Das hopes that a status quo in the December monetary policy would prove to be the right call over time.
The Reserve Bank of India foresaw a slowdown and acted ahead of time with repo rate revisions, Governor Shaktikanta Das said Monday, hoping that a status quo on rates earlier this month would prove to be a right call over time.
India’s Monetary Policy Committee cut the benchmark interest rate five times in 2019, paring it by 135 basis points, before opting for a pause in December due to a spike in inflation and despite a growth slump.
“Both the government and RBI have acted in time. And I can say with regard to RBI, we have acted a little bit ahead of time in terms of reducing our policy rates," Das said at the India Economics Conclave organised by the Times Group. “As early as February this year, RBI saw that there is a growth slowdown, we saw that a momentum for slowdown is building up, so we started cutting rates this year.”
The market was surprised by the February rate cut, and also by the pause in December, Das said.
“I don't know why the market was surprised (by status quo in December). February, I was told that the markets were surprised, but subsequently I'm happy and thank all of you for accepting that it was a right call to take,” the central bank governor said. "This time the call that we've taken, I do hope that the events will unfold in a manner which will prove that the MPC decision was right.”
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He also hoped for the U.S.-China truce on trade tariffs, announced over the weekend, would last as he pitched for coordinated efforts to push global growth like those after the 2008 financial crisis.