Interest rates will come down when inflation softens: RBI
Ahmedabad: Stating that rising prices should have been controlled faster, Reserve bank of India (RBI) deputy governor K.C. Chakrabarty said on Saturday that interest rates will be reduced as and when the inflation comes down.
“As and when inflation rate comes down, interest rates will come down..." he said on the sidelines of an event here.
“Our policy rate was 3.5% in 2008. Then inflation went up to 10%, we should have controlled inflation faster," he said.
Inflation in July moderated to 6.87%, helped by decline in vegetable prices, even as food inflation stayed in double digits and manufactured items remained under price pressure. Though the inflation has moderated in July, it remains much above the 5-6% comfort level of the RBI.
On the high current account deficit, he said it is mainly because of high oil and gold imports.
Chakrabarty also said a growth of at least 9-10% shall be required over the next 20 years. “We need to grow at least by 9-10% for next 20 years if the society has to survive and this burden has to be shouldered by you all," he said.
On the global economic situation, he said, “This is a crisis, absolutely no doubt, it comes once in a lifetime... I can say we shall not be alive when this type of crisis comes next..."
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