Finance Minister Arun Jaitley Favours Interest Rate Cut: Report
Interest rate cut to trigger demand in the construction sector, Jaitley says
Oct 25, 2014
Source :
Arun Jaitley, Union Finance Minister


New Delhi: Finance Minister Arun Jaitley favours a cut in interest rates to trigger demand in the construction sector, a newspaper report said on Saturday, but the Reserve Bank of India (RBI) has signalled it will not ease policy until it is confident of lower inflation.

In May, Prime Minister Modi was elected on promises that his government would create jobs and rejuvenate the economy, but experts were disappointed by Mr 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 stabilising somewhat, the time seems to have come to moderate the interest rates," Mr Jaitley said in an interview to a newspaper.

Last month, the RBI sent a strong signal that it would refrain from cutting interest rates until it was confident that consumer inflation can be cut to a target of 6 per cent 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.

Consumer prices rose a slower-than-expected 6.46 per cent from a year earlier, the lowest since figures were first published in January 2012.

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