Members see scope for more rate cuts

Await full impact of past steps so that future actions can have maximum benefit

- MANOJIT SAHA

Even if the Reserve Bank of India's Monetary Policy Committee decided to hold interest rates in the October meeting, it acknowledged the scope for further rate cuts while waiting for the impact of the past steps to play out.

All the members of the panel voted to keep the policy repo rate at 5.5 per cent while two members-Ram Singh and Nagesh Kumar- said the stance should be changed to "neutral".

In the minutes of the meeting, released on Wednesday, Reserve Bank of India Governor Sanjay Malhotra noted even though growth was strong by current reckoning, its outlook was softer and was expected to be below aspirations.

He said the benign outlook for the headline and core-inflation rates as a result of the downward revision of projections opened up the policy space to further support growth.

"... even though there is policy space to further cut the policy rate, I feel this is not the opportune time for the same as it will not have the desirable impact," he said. "The intent of policy, nevertheless, is to continue to facilitate growth-enabling conditions," Malhotra added.