Ex-FM Yashwant Sinha welcomes RBI repo rate cut

KOLKATA: Former Union Finance Minister and senior BJP leader Yashwant Sinha today welcomed the Reserve Bank of India's decision to cut the key policy rate by 25 basis points and described it as a 'positive move'.

A seemingly elated Sinha, speaking at an interaction here today, said that he was quite "surprised" with RBI's move but said that it would "boost the stock market".

According to Sinha, the RBI should have ideally cut down the key policy rate by 50 basis points instead of that announced today.

He stressed that interest rate has a big role in taking forward the economy of the country and the RBI must not tinker with the interest rate but cut it down.

"I think the interest rate has a big role in taking forward the economy of the country. Cost of the money must be cut down.

"The RBI looks into the inflation rate to decide on the interest rate. And the comfortable level of the rate of inflation ideally be six per cent for the RBI... The RBI must cut down the interest rate but not tinker with it," he said.

Describing the Arun Jaitley's recently-announced central Budget as a "growth-oriented one", Sinha stated that the "under the new NDA government we are moving into new direction and decided to bring it to where we had left the government in 2004".

The RBI today surprised markets by reducing the benchmark interest rate by 0.25 per cent to 7.5 per cent on the back of softening inflation and the government's commitment to continue the fiscal consolidation programme.