Arun Jaitley Steps Up Rate Cut Pressure on RBI

August 21, 2015: In the Monetary Policy Review, RBI didn’t cut the rates and smashed all hopes of the industry. As per the sources, Finance Minister Arun Jaitley is increasing the pressure on RBI to trim rates. If we look at the Economy and inflation, there may be an immediate cut of 50 basis points.

The Government and the RBI are like two odd faces for the rate cut. While RBI didn’t cut the rates apart from the expectations and the Government is in the favor of easing rates.

 

RBI and Finnace Ministry

 

"Hopefully, the impact of inflation being under control is a factor that the central bank, with all its wisdom, will take note of," Mr Jaitley told a gathering of bankers and executives in Mumbai.

India is likely to cross China for economic growth in papers, but it is totally different in reality as the government is struggling with spending, consumptions, monsoon sessions and many other factors.

The Land Bill, delayed Tax is the result of unsuccessful monsoon sessions of the Parliament.

"Going by the (consumer price) inflation numbers, and the global economic environment, the RBI should have cut interest rates by 200 basis points (this year) by December," said one ministry official who works with Jaitley on this issue.

Monsoon is another crucial factor for the rate cut as it has a great impact on the food prices.

The Reserve Bank of India has slashed the rate by 75 basis points since January. The current repo rate is 7.25 per cent. The market is demanding another rate cut from RBI.