RBI says constantly monitoring economic conditions
The Reserve Bank of India (RBI) is constantly monitoring economic conditions and will take action as needed, RBI governor D Subbarao told Finance Minister Pranab Mukherjee on Sunday, 22 February 2009. The RBI governor briefed the finance minister on the evolution of the global financial crisis, the outlook for global economy and the response of advanced and the emerging economies to the crisis based on his meetings with central bank governors in Basel last month and Kuala Lumpur in February 2009, the RBI said.
There are expectations that the RBI will cut interest rates further to support faltering growth. A sharp fall in inflation has provided room for the central bank to cut rates. The global financial sector crisis and recession in key global economies have pushed economic growth in India down to a six-year low. The Central Statistical Organisation (CSO) has pegged India's projected GDP growth for the year ending March 2009 at 7.1%, the slowest in six years and below the previous year's 9% rise.
Inflation based on the wholesale price index rose 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government on 19 February 2009, showed. It was the index's lowest annual rise since 3.83% on 29 December 2007.
Market men see a bigger role for RBI in the coming months to shield the domestic economy from the impact of the global financial crisis and recession in key global economies as the election code will be in force by the end of this month which means that there cannon be any policy action from the government. Once the model code of conduct comes into force after the announcement of poll dates, any announcement by the government will be subject to Election Commission's (EC) scrutiny.
The EC is likely to announce the poll date for the parliamentary elections by the end of this month. The elections are likely to be held in April-May 2009
Comments