Economic situation warrants easing of rates by RBI: CEA Arvind Subramanian insists

New Delhi: Seldom have economic conditions warranted a substantial monetary policy easing as they do now, Chief Economic Advisor Arvind Subramanian said today as the Reserve Bank left lending rates unchanged citing risks to inflation.

He said "we respect" the views and decisions of RBI in the broader good, but "I wanted to give you my own technical assessment of the inflation and growth outlook".

Chief Economic Advisor Arvind Subramanian. PIB

Chief Economic Advisor Arvind Subramanian. PIB

Talking to reporters after RBI released its statement, Subramanian said there is a plausible alternative macro-economic assessment.

"In this view, not just headline inflation has been running well below the target so far, but even core inflation ...has also declined sharply. In this view, inflation forecast errors by the RBI have been large and systematically one-sided in overstating inflation," he said.

Further, he said, the outlook also points to a slowdown, and not to rapid acceleration.

At the same time, the real policy interest rate is tight and rising.

"To conclude, seldom have economic conditions and the outlook warranted substantial monetary policy easing," said Subramanian.

Headed by RBI Governor Urjit Patel, the Monetary Policy Committee (MPC) for the fourth straight time kept the repo rate unchanged, at which it lends to the banks, at 6.25 percent. The reverse repo, at which RBI borrows, will be 6 percent.

After a sharp decline in April, RBI has lowered inflation projection.

Updated Date: Jun 07, 2017 20:12 PM

Also Watch

Social Media Star: Abhishek Bachchan, Varun Grover reveal how they handle selfies, trolls and broccoli
  • Monday, July 16, 2018 It's a Wrap: Soorma star Diljit Dosanjh and Hockey legend Sandeep Singh in conversation with Parul Sharma
  • Monday, July 16, 2018 Watch: Dalit man in Uttar Pradesh defies decades of prejudice by taking out baraat in Thakur-dominated Nizampur village
  • Monday, July 16, 2018 India's water crisis: After govt apathy, Odisha farmer carves out 3-km canal from hills to tackle scarcity in village
  • Sunday, July 15, 2018 Maurizio Sarri, named as new Chelsea manager, is owner Roman Abramovich's latest gamble in quest for 'perfect football'

Also See