New Delhi: RBI Deputy Governor on Thursday signaled during an interaction with PTI that it was unlikely that interest rates would go up any further. The economist who acquired his PhD in Finance from the NYU Stern School of business said that even the finance ministry did not see any scope to pursue a northward movement.
Discussions on interest rates and repo rates will be conducted by the RBI's monetary policy committee on June 4-5. The Deputy Governor favoured withdrawal of monetary accommodation in the next policy review meeting.
As per the minutes of the monetary policy committee meeting of April, RBI Deputy Governor Viral Acharya favoured withdrawal of monetary accommodation in the next policy review meeting on June 4-5. Acharya was of the view that the central bank should wait for some more time before withdrawing monetary accommodation.
The six-member Monetary Policy Committee (MPC), headed by Patel, had left the benchmark repo rate unchanged at 6% for the third time in a row after deliberations on April 4-5. Accordingly, reverse repo was kept unchanged at 5.75%. No changes were made to cash reserve ratio (CRR) and statutory liquidity ratio (SLR), which stand at 4% and 19.5%, respectively.
RBI Governor Urjit Patel preferred to wait for more data before changing monetary stance though he took note of recovery in economic activities and continued improvement in credit offtake, according to minutes of the April policy meeting. Patel noted that economic activity has been recovering, with the GDP growth in 2018-19 projected to be higher at 7.4% amid clearer signs of revival of investment activity.
"I feel it is important to let some more hard data come in, especially on growth, and allow some more time to let the early skirmishes on the global trade front play out. I am, however, likely to shift decisively to vote for a beginning of 'withdrawal of accommodation' in the next MPC meeting in June," said Acharya.
Acharya's thoughts were in line with that of Economic Affairs Secretary Subhash Garg, who had shared with PTI during an interview, "my sense is that interest rates have firmed up enough. I don't think that they should increase further."