Interest rates unchanged along expected lines: Federal Bank

Driven by softening of fuel and food prices, there was pressure on RBI to cut the interest rates.

Dec 02, 2014 04:12 IST India Infoline News Service

Shyam Srinivasan, MD & CEO, Federal Bank
Shyam Srinivasan, CEO, Federal Bank said that the credit policy announcement made today by the RBI Governor was "along expected lines" both in content and the underlying tone, which suggested an accommodative stance in the period ahead (even outside of policy review cycle), should data flow suggest continued easing up of inflation.

He added, "Further the likely announcement regarding the extension of the 5:25 formula for existing projects points to the fact that there is focus on creating enablers for easing up of business conduct and lubricating the system, thereby stimulate credit flows and industrial activity"

Earlier today, Dr. Raghuram Rajan said that there would be no cuts in the REPO rates or the reverse REPO rates. Driven by softening of fuel and food prices, the wholesale price inflation dropped for the fifth consecutive month to 1.77 per cent in October, its slowest since October 2009. Retail inflation at 5.52 per cent has been the slowest since January 2012. Prime concerns such as food inflation, slowed to 2.7 per cent in October, from 9.6 per cent in May - its lowest level since February 2012. RBI is targeting retail inflation at 8 per cent in January 2015 to 6 per cent in January 2016. Therefore, there was pressure on the governor to cut the interest rate in its bi-monthly monetary policy. 

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