RBI Governor Rajan meets FM Jaitley ahead of monetary policy

New Delhi: Ahead of the monetary policy review next week, RBI Governor Raghuram Rajan met Finance Minister Arun Jaitley Friday and discussed various macroeconomic issues.

RBI is scheduled to announce its bi-monthly monetary policy review on December 1 and there are expectations that it is likely to keep key policy rates unchanged.

"Meeting is always good and cordial," Rajan said after discussion with the minister here.

It is understood that the RBI Governor discussed current macroeconomic conditions and the global economic scenario in the wake of an expected US Fed rate hike next month.

Policymakers and analysts expect that RBI is likely to maintain status quo as retail inflation is high and there is possibility of a Fed rate hike during December.

The first US interest rate increase since 2006 is expected next month by a majority of investors.

RBI mostly tracks the Consumer Price Index-based retail inflation for its monetary policy decisions.

Rising for the third straight month, retail inflation climbed to 5 percent in October as against 4.62 percent in the same month a year ago due to costlier pulses and other food items.

At the same time, deflationary pressure eased a bit with WPI inflation rate moving up slightly to (-)3.81 percent in October as pulses, vegetables and onion turned costlier.

In the last policy review on September 29, RBI had cut interest rate by 0.5 percent, much higher than the anticipated 25 basis points.

The benchmark repurchase (repo) rate has subsequently come down from 7.25 percent to 6.75 percent, the lowest in four-and-a-half years.

Earlier this month, Rajan had said that the central bank is comfortable with the current rate of interest till further room is available.