Govtwants RBI rate cut before March

Impatient for faster economic growth, government is lobbying for a reduction in official interest rates in coming months, as it expects inflation to stay close to a 4 per cent target, finance ministry officials said.

At its last meeting in October, the Monetary Policy Committee (MPC) left the repo rate at 6.0 per cent, near a seven-year low, and a Reuters poll found that economists expected the rate to stay there through to the second quarter of next year.

The finance ministry, according to officials, wants a rate cut sooner than that, putting a focus on the MPC meeting on December 5-6, or when it next convenes in February.

“We expect the RBI to cut policy rates, if not in December then in its next policy review,” one ministry official said on condition of anonymity. After that, he said, higher oil prices could fuel inflation, making it more difficult to cut rates. REUTERS