India’s central bank left interest rates unchanged for a fifth straight meeting while
signalling a possible easing early next year after Prime Minister Narendra Modi’s
government called for lower borrowing costs.
Governor Raghuram Rajan kept the benchmark repurchase rate at 8 percent,
the Reserve Bank
of India said
in a statement in Mumbai on 2 December. Risks to the central bank’s January 2016
target of 6 percent inflation “appear evenly balanced,”
he said today in a statement.
As China seeks to revive its economy with lower rates and Russia
and Brazil raise them to fight inflation, Rajan’s
middle path reflects his priority to reduce entrenched price pressures to lay the
ground for stronger growth. A drop in global commodity prices may open a window
in the coming months for his first rate cut since taking office.
Calls for a rate-cut intensified as growth slowed last
quarter and inflation eased to below Rajan’s goal. He
told reporters that the government is “comfortable” with a central bank-panel proposal
to set a target of 4 percent plus or minus 2 percentage
points after 2016.
Consumer
prices rose
5.52 percent in October from a year earlier, the slowest
pace since the index was created in January 2012. Gross domestic
product expanded
5.3 percent in the three months through September, compared
with 5.7 percent in the previous quarter.