RBI Focused on Pace of Policy Transmission: Raghuram Rajan

Thomson Reuters

05 Apr 2016, 04:01 PM IST

RBI Governor Raghuram Rajan said it is important not to fixate with a 25-basis-point or 50-basis-point rate cut but to focus on the process by which lower rates are being passed on.

Mumbai/New Delhi: Reserve Bank of India Governor Raghuram Rajan said on Tuesday the focus should be on how to ensure banks bring down their lending rates, rather than on debating how many rate cuts the central bank should be delivering.

"It's important not to fixate with the 25 basis point or 50 basis point (rate cut) or whatever number one thought was possible, but to focus on the process by which lower rates are being transmitted into the market which should be extremely helpful," Mr Rajan told analysts during a teleconference.

The RBI cut the key repo rate by 25 basis points to 6.50 per cent and took steps to infuse cash into the banking system on Tuesday.

Nonetheless Mr Rajan also left open the prospect of more easing.

"Of course we are still open to looking for possible room (for rate cuts), while recognising there are risks on both sides to the inflation process," he said.