Raghuram Rajan hints at rate cut; inflation down quicker than expected

WASHINGTON: Indicating an imminent rate cut, RBI Governor Raghuram Rajan has said inflation has come down to the comfort zone quicker than expected and he is keeping a watch on data to see how much room is there for further easing of the monetary policy. “We are on a phase of accommodation. We are still in that phase. We are looking at the data to see what more room we have," Rajan said.

Stating that RBI monetary policy has been accommodative, Rajan said he has cut interest rates three times already this year and he was "still on an accommodative setting".

"You know, like other central banks, we are in a wait-and-watch mode. And as the incoming data are analysed, we are looking to see how much monetary room there is for more accommodation," Rajan told Wall Street Journal in an interview on the sidelines of the Jackson Hole summit in Wyoming. Rajan, who was participating in this elite economic symposium of the Kansas City Federal Reserve, said inflation has come down in India, and replied in affirmative when asked whether it was coming into RBI's comfort zone more quickly than he had expected. In an earlier interview also, to CNBC at the same summit, Rajan had said that he was not finished with rate cuts and RBI continues to remain in accommodative mode.

When asked whether the capital flight, and currency depreciation would put him in aposition to keep the rates unchanged, Rajan told WSJ: "No, you know, capital is attracted to strong economies. What we have seen in India is that for the most part we have been attracting capital. "Now, emerging markets have suffered a loss of capital, outflows, in the last few months. We have had some, nothing too particularly dramatic. It's been a little out from the equity markets. The debt flows have stayed prettymuch in."