The Reserve Bank lowered the policy rate by 25 bps to make the most of the space offered by the softening in prices, and will deliver more on the rate front if its lower inflation estimates are achieved, governor Shaktikanta Das said Thursday. The surprise 25 basis points rate cut to 6.25 percent is a measure to broad base credit growth across all the sectors of the economy that's gathering more steam now, the governor said. It can be noted that the RBI had hiked rates twice in quick succession in 2018 but has been cutting its inflation projections ever since, leading to the rate cut Thursday-the first since the middle of 2017. He also decried criticism of RBI's inflation projections being off-the-mark, saying one cannot cherry-pick on one aspect and say the central bank's projections are wrong and claimed that relative to its peers, RBI's projections are not way off-the-mark. Acharya also said the RBI does not act with a real rate of interest, which is the difference between the rate of inflation and the benchmark lending rate, in mind while setting its policies.

Source: dna February 07, 2019 17:15 UTC