Rajan, Jaitley meet ahead of policy review meeting on June 2

Rajan, Jaitley meet ahead of policy review meeting on June 2

 The Reserve Bank of India (RBI) Governor Raghuram Rajan on Wednesday met Finance Minister Arun Jaitley amid expectations that the central bank will cut policy interest rates by at least 25 bps when it meets on June 2, 2015.

The RBI has already cut rates twice since January this year as inflation fell within its comfort zone, but left them unchanged in the last policy review in April.

“We discussed a number of issues,” Rajan told reporters after a meeting with Jaitley. The meeting assumes significance as the pitch for rate cut is equally high within the government as within the industry.

On Tuesday, Chief Economic Advisor Arvind Subramanian had suggested the same.
“Other countries are aggressively easing monetary policy,” he had said, implying that the RBI should also cut the repo rate soon. Repo rate is the rate at which RBI lends to banks and acts as a benchmark to the interest rates that banks pay for their deposits and in turn charge on their loans.

The RBI is meeting on June 2 for its second bi-monthly policy review.
Last week, Jaitley too had indicated that he would favour a rate cut by the RBI.
Asked if it was time for RBI to cut interest rates in view of moderation in inflation, Jaitley had replied, “My views are well-known. It is time.”


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