RBI Governer Warns Against Chasing Economic Growth Too Fast

Mumbai;Sept 19: India must focus on keeping inflation low and avoid using monetary policy alone and short-term government incentives to fuel short-term economic growth, the central bank governor said on Friday.
Reserve Bank of India governor Raghuram Rajan is under growing pressure, from industry and from within the government,to cut interest rates as India’s economic growth stutters and inflation cools.
On Friday, Indian markets rallied as investors bet there would be a cut this month after the US Federal Reserve kept interest rates on hold.
Rajan said monetary policy can help strengthen the current economic recovery, but he added India will ultimately “expand sustainable growth potential only by continuing to implement reforms the government and regulators have announced.”

“For us at the RBI, the key tasks are to keep inflation low, not just today, but well into the future,” he said in a lecture organized by the Confederation of Indian Industry.

Analysts said Rajan’s remarks left open chances for a rate cut, without feeding speculation.

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