RBI governor wished for a bigger repo rate cut

Days after the RBI’s monetary policy review, the minutes of the Monetary Policy Committee (MPC) meeting released on Thursday suggested that Governor Shaktikanta Das may have wished for a bigger than 25 basis point cut in key policy repo rate in order to support India’s economic growth. He had voted for a 25 bps, though.

“I would like to state here that there is a need to consider interest rate adjustments, not necessarily in the conventional way of 25 bps or multiples thereof. This idea needs further debate and discussion,” Das had said, according to the minutes. Das’ discomfort may have stemmed from the fact that smaller interest rate cuts makes it difficult for lenders to pass on the benefits to end consumers. Bankers have always suggested that a bigger repo rate cut could help in faster transmission.

On April 4, the RBI had reduced the repo rate by 25 bps to 6% on softening inflation.