New Delhi: The Finance Ministry on Tuesday expressed hope that the Reserve Bank will not signal hike in interest rates in its monetary review next week as the economic recovery is still in its nascent stage.
"We hope it (RBI) continues," Finance Secretary Ashok Chawla told reporters when asked whether RBI will continue its soft monetary stance.
Talking to reporters on the sidelines of the launch of
National Skill Development Corporation, Chawla said, the
current monetary stance of the Reserve Bank is appropriate and
RBI Governor D Subbarao is likely to meet Prime Minister
Manmohan Singh and Finance Minister Pranab Mukherjee on
October 23 before the monetary policy review.
"Let us have discussion. The Governor, RBI is expected to
be in Delhi to have discussion with me, the Prime Minister.
Therefore it is not a question of expectations," Mukherjee,
who was also present there said when asked about his
expectations from the monetary review.
To a query on what direction the Finance Ministry will
give credit flow the FM said, "I will have discussions with
him (the RBI Governor)."
With inflationary pressure building up in the economy due
to rising food prices, analysts expect the apex bank to keep a
status quo on monetary stance.
Experts believe inflation will near six per cent-mark by
the end of this fiscal from the current level of little below
one per cent.
Since September last year, following the collapse of US
financial services icon Lehman Brothers that aggravated the
global financial crisis, the RBI has ensured greater credit
flow through signalling cut in interest rates as well as
deposit requirements for banks.
The central bank has cut short term lending rate (Repo)
by 4.25 percentage points to 4.75 per cent, short term
borrowing rate (Reverse repo) by 2.75 percentage points to
3.25 per cent and the mandatory cash deposit requirements for
banks by four percentage points to five per cent.