In­dia keeps rates on hold

The Myanmar Times - - International Business -

IN­DIA’S Raghuram Ra­jan kept in­ter­est rates on hold yes­ter­day in a bid to wres­tle down in­fla­tion, in his fi­nal pol­icy re­view as cen­tral bank chief.

In a widely ex­pected move, the pop­u­lar Re­serve Bank of In­dia gov­er­nor said he would hold the bench­mark repo rate, the level at which it lends to banks, at 6.50 per­cent.

Twenty-six out of 27 econ­o­mists in a Bloomberg News sur­vey pre­dicted the bank would hold rates, af­ter it cut them by 25 ba­sis points in April to their low­est level since early 2011.

“In view of con­fig­u­ra­tion of risks, it is ap­pro­pri­ate for the re­serve bank to keep the pol­icy repo rate un­changed,” Mr Ra­jan said.

He has slashed in­ter­est rates over the past 18 months, but the gov­ern­ment wanted deeper cuts, say­ing these would boost growth fur­ther.

In­dia’s econ­omy ex­panded by 7.9pc in the fourth quar­ter of 201516, the fastest of any ma­jor econ­omy.

The gov­ern­ment is yet to an­nounce a suc­ces­sor to Mr Ra­jan, two months af­ter he an­nounced he was step­ping down in Septem­ber when his term fin­ishes and re­turn­ing to academia in the United States.

Mr Ra­jan, who has made con­trol­ling in­fla­tion a pri­or­ity, has been widely cred­ited with bring­ing sta­bil­ity to In­dia’s econ­omy since tak­ing over the RBI in Septem­ber 2013.

But his pol­icy de­ci­sions have been crit­i­cised by a prom­i­nent mem­ber of Prime Min­is­ter Naren­dra Modi’s Hindu na­tion­al­ist party and he has also clashed with the gov­ern­ment.

Mr Ra­jan, who fa­mously pre­dicted the 2008 global fi­nan­cial cri­sis, has brought down dou­ble-digit in­fla­tion dur­ing his ten­ure. He has set a goal of lim­it­ing in­fla­tion to 5pc by March 2017. But in­fla­tion inched up­ward to 5.77pc in June. –

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