A day after saying that there is more fire power with the Reserve Bank to boost sagging growth, governor Shaktikanta Das Friday said future rate cuts will depend on the incoming data but warned that we cannot have lower interest rates like in advanced economies.
Since February, the RBI has reduced repo rate by 110 basis points in four successive actions with the last one being an unconventional 35 bps, yanking down the policy rates to a nine-year low of 5.4 percent.
Thursday, Das had warned the government against any fiscal measures to boost the sagging economy given its limited fiscal space, said the RBI could still do more to spur growth given softer inflation, which is likely to remain under the targeted 4 percent over the next 12 months or so, giving it more legroom to pursue an easy money policy.
"How much more we can go down (with the rate cuts)? We
He said most of the advanced economies are having near zero inflation and therefore their rates are also low. "But our inflation target is 4 percent, and therefore, that should be the guiding force."
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