India’s Finance Minister Seeks ‘Significant’ Rate Cuts from RBI
(Bloomberg) -- India’s Finance Minister Nirmala Sitharaman said the central bank should deliver “significant” interest rate cuts to spur economic growth, the Economic Times reported, citing an interview with her.
Speaking ahead of the Reserve Bank of India’s Aug. 7 policy decision, Sitharaman said “I’ll honestly wish” for more easing, and that “a significant rate cut would do a lot of good for the country.”
Her comments add to pressure on Governor Shaktikanta Das to follow through with more easing after three interest rate cuts this year. He signaled a more cautious stance in a recent interview, saying incoming data will determine the RBI’s future policy action. He also said the change in the policy stance to “accommodative” was in itself a quarter-point of easing.
D.S. Malik, a spokesman for the finance ministry, didn’t immediately respond to a phone call and email seeking a response.
Sitharaman also told the newspaper she hasn’t been asked to review plans to sell an international bond. Local reports last week threw doubt over the debt sale, with some suggesting Prime Minister Narendra Modi was in favor of selling rupee-denominated bonds to overseas investors instead of foreign-currency debt.
Sovereign bonds rallied on Monday, with the yield on the benchmark 10-year security dropping nine basis points to 6.43%.
While the finance minister acknowledged the Monetary Policy Committee’s 75 basis points of cuts so far this year, and the switch to an easing stance, she suggested there’s still more room to move.
“We will now have to look at that route with a lot more hope,” Economic Times quoted her as saying. “The industry also feels there is space for it.”
Latest economic data show inflation has remained under the 4% medium-term target of the RBI for 11 straight months, while economic growth has slowed to a five-year low of 5.8% in the first three months of 2019.
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