PM adviser says rate cut only if non-food inflation falls
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The Reserve Bank of India should resort to cutting interest rates only when there are definite signs of non-food inflation easing in the economy, Prime Minister's Economic Advisory Council's Chairman C. Rangarajan said on Monday.
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The adviser told television channels that he expects food inflation to fall further until March and the RBI's move to cut banks' cash reserve ratio is unlikely to impede the central bank's stance on managing inflation.
Earlier, the RBI cut the CRR by 50 basis points to 5.50 percent in a move it said would infuse about 320 billion rupees into the banking system.
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Annual headline inflation, as measured by the wholesale price index, slowed to a two-year low of 7.47 percent in December, thanks to a sharp decline in food inflation. However, manufactured product inflation edged up from the previous month.
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