RBI: room to cut rates may emerge once inflation comes down

MUMBAI Tue Jan 28, 2014 1:04pm IST

A vendor waits for customers at her shop selling vegetables in Dharavi, one of Asia's largest slums, in Mumbai January 24, 2014. REUTERS/Mansi Thapliyal/Files

A vendor waits for customers at her shop selling vegetables in Dharavi, one of Asia's largest slums, in Mumbai January 24, 2014.

Credit: Reuters/Mansi Thapliyal/Files

Related Topics

MUMBAI (Reuters) - The Reserve Bank of India will have room to cut interest rates when inflation comes down but whether or not the RBI actually cuts the rate is a bit too premature to say, Governor Raghuram Rajan said on Tuesday after hiking rates in a surprise move.

Rajan also said that it was necessary to make the statutory liquidity ratio (SLR) a liquidity function rather than a funding function, but added that he does not see the need to cut the SLR immediately.

Earlier in the day, the RBI unexpectedly raised its policy interest rate by 25 basis points but said that if consumer price inflation eases as projected it does not foresee further near-term tightening.

(Reporting by Suvashree Dey Choudhury and Mumbai Treasury Team; Writing by Swati Bhat; Editing by Supriya Kurane)

FILED UNDER:

REUTERS SHOWCASE

2015: India Outlook

2015: India Outlook

India in 2014: A dream run for markets  Full Article 

Funding Woes

Funding Woes

Co-founder of SpiceJet seeks time to finalise rescue  Full Article 

Flying Back on Course

Flying Back on Course

The inside story of the new Airbus A350 jet  Full Article 

Oil Prices

Oil Prices

Oil rebounds above $62, tracking broader markets  Full Article 

Tracking Gold

Tracking Gold

Gold inches higher on weaker dollar, Asian buying  Full Article 

Cyber Attacks

Cyber Attacks

China condemns cyberattacks, but says no proof N.Korea hacked Sony  Full Article 

Connecting Markets

Connecting Markets

China stock connect scheme scorecard throws up surprises  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage