Subbarao overruled panel on rate actionhttps://indianexpress.com/article/news-archive/web/subbarao-overruled-panel-on-rate-action/

Subbarao overruled panel on rate action

Reserve Bank of India (RBI) Governor D Subbarao went against the proposal of a majority of members of the Technical Advisory Committee (TAC) on the Monetary Policy that recommended status quo in the repo rate at its policy meeting on May 3.

Reserve Bank of India (RBI) Governor D Subbarao went against the proposal of a majority of members of the Technical Advisory Committee (TAC) on the Monetary Policy that recommended status quo in the repo rate at its policy meeting on May 3.

Although four of TAC’s seven external members recommended that the policy repo rates be left unchanged,the governor cut it by 25 basis points to 7.25 per cent. In the assessment of these four members,the global situation is weak,the fiscal situation does not provide much comfort and the CAD could remain on a high trajectory,the RBI said.

“Moreover,even though repo rate has been reduced by 100 basis points in 2012-13,lending rates have not gone down commensurately… These members suggested that the RBI may wait for at least one quarter to gauge the evolving macroeconomic situation,” the RBI said.