Rate cut is an important step for growth: Centre

Indicating that the government wants further easing in interest rates, the finance ministry on Wednesday said that RBI’s decision to cut interest rates by 0.25 per cent is an important step to “converge” toward “appropriate real monetary conditions” for sustained growth consistent with India’s potential.

“We welcome the 25 basis points cut in the repo rate as an important step necessary to converge toward the appropriate real monetary conditions for sustained growth consistent with India’s potential and for stable, moderate inflation,” department of economic affairs (DEA), secretary Subhash Chandra Garg said.

He said that the government has taken note of the Monetary Policy Committee’s statement and its assessment of the inflation and growth outlook

Earlier, there were some reports that said the government thought that 0.50 per cent interest rates cut by RBI is appropriate in current situation to restart growth.

The government had been pitching for a rate cut to boost economic growth amid retail inflation falling to a historic low of 1.54 per cent in June.

The RBI, in its third bimonthly monetary policy of the fiscal, reduced the repo rate after a gap of almost 10 months. The new repo rate at 6 per cent is the lowest in six- and-ahalf years.