Forecasting that inflation is inching towards zero, ICICI Bank Managing Director and CEO K V Kamath suggested to the Reserve Bank to further cut key policy rates by 100 basis points as part of a calibrated move to usher in a low interest rate regime."I think just now let us start by cutting them (repo and reverse repo rates) by 1 per cent or so, and see what happens," he said when asked for what his advise would be for RBI to reverse the economic slowdown.Kamath, who is also the President of the Confederation of Indian Industry, said, "It would be in everybody's interest to work interest rates down. Inflation clearly talked of being near zero. I think it is the right time to work on this front (reducing interest rates) now."The economy thrives in a low-interest rate scenario. By the time inflation comes to zero or near zero, we have interest rates down where we wanted.so I think use repo and reverse repo in small measures and see what they do to interest rates."The inflation has nearly halved from the peak of 12.91 per cent in August and with sharp decline in commodity and crude prices in the international market, it is likely to dip further.Having already taken host of measures to pump in Rs 3,00,000 crore into the system, RBI Governor D Subbarao, who is reportedly working on more initiatives, met Prime Minister Manmohan Singh on Monday.The Government in its Mid-Year Economic Review too made a case for "aggressive" easing of monetary policy by RBI and reduction in benchmark interest rates in the next six to 12 months.
