We can't keep on slashing policy rates every time: Shaktikanta Das

The sharp decline in growth had many analysts assuming the RBI will deliver a rate cut on Thursday.

Published: 05th December 2019 03:29 PM  |   Last Updated: 05th December 2019 03:29 PM   |  A+A-

Shaktikanta Das

RBI governor Shaktikanta Das. (File Photo | PTI)


MUMBAI: After surprisingly holding the rates, Reserve Bank governor Shaktikanta Das on Thursday said the Reserve Bank cannot "mechanically" keep cutting interest rates every time.

He said the central bank will wait for the impact of the coordinated measures taken by the government and the RBI over the past few months to push growth to play out before taking a call on rates.

ALSO READ: RBI surprises by holding policy rates; slashes GDP growth outlook for 2019-20 to 5 per cent

Official data showed growth has fallen to an over six-year low at 4.5 per cent in the second quarter, and the RBI also sharply cut its FY20 estimate to 5 per cent-a full 110 bps from its October revision, which again was a 90 bps downward revision from the August assessment.

The sharp decline in growth had many analysts assuming the RBI will deliver a rate cut on Thursday.

ALSO READ: RBI satisfied with pace of monetary transmission ​

He also pointed towards a line in the monetary policy committee resolution, which makes it "explicitly" clear that there is a scope for further rate cuts.

Das said there are green shoots in the economy, but it is too early to take a call on their sustainability said the recent measures initiated by the government will help to revive sentiment and spur domestic demand, which is being blamed as prime reasons for the slowdown.


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