Zee Media Bureau
New Delhi/Mumbai: Reserve Bank of India Governor Raghuram Rajan on Tuesday said that the central bank will continue to be vigilant, soon after announcing the 4th monetary policy at RBI headquarters in Mumbai.
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RBI has cut FY16 real GDP growth estimate to 7.4 percent while expecting that growth will pick up towards the latter part of the fiscal. RBI has said that inflation is expected to reach 5.8 percent in January 2016.
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“Inflation will stay below January 2016 target of 6 percent in FY16 and will average 5.5 percent for FY17,” said the RBI Governor.
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The apex bank also said that limits for FPI investment in debt securities will be henceforth announced or fixed in rupee terms. "Markets have transmitted Reserve Bank`s past policy actions via commercial paper and corporate bonds, but banks have done so only to a limited extent," Rajan said.
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“Limit for FPI investment in government bonds will be increased in phases to 5 percent of outstanding stock by March 2018,” Rajan added.
RBI will issue final guidelines on base rate computation by November-end, he said.
There was pressure this time on the central bank to cut rates from all stakeholders, including a veiled nudge from government functionaries, especially since India`s growth has been floundering and inflation and the pressure on the price line has been seemingly under control and declining.
