India's
finance minister favors interest rate cut: paper
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[October 25, 2014]
NEW DELHI (Reuters) - India's
Finance Minister Arun Jaitley favors a cut in interest rates to trigger
demand in the construction sector, a newspaper report said on Saturday,
but the central bank has signal it will not ease policy until it is
confident of lower inflation.
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In May, Prime Minister Modi was elected on promises that his
government would create jobs and rejuvenate the Indian economy, but
experts were disappointed by Jaitley's first budget and a lack of
early progress on fixing structural economic problems.
"Currently, interest rates are a disincentive. Now that inflation
seems to be stabilizing somewhat, the time seems to have come to
moderate the interest rates," Jaitley said in an interview with the
Times of India.
Last month, the Reserve Bank of India, sent a strong signal that it
would refrain from cutting interest rates until the central bank was
confident that consumer inflation can be cut to a target of 6
percent by January 2016.
India's retail inflation eased for a second straight month in
September, but the risks of price shocks from weak monsoon rains and
oil are expected to prevent the central bank from cutting interest
rates soon.
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Consumer prices <INCPIY=ECI> rose a slower-than-expected 6.46
percent from a year earlier, the lowest since figures were first
published in January 2012.
(Reporting by Ratnajyoti Dutta and Manoj Kumar; Editing by Michael
Perry)
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