Will RBI Governor Raghuram Rajan bite the bullet today?

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Reserve Bank of India governor Raghuram Rajan met finance minister Arun Jaitley on Monday amid clamour for a rate cut in monetary policy review “I do not think a rate cut is very likely. It is still too early. Central banks all over the world tend to be conservative. And RBI is not confident yet about the inflation. Inflation numbers look a lot more respectable because of the last year’s base. So, if I were the RBI, I would say I need to be a little more confident although I am worried about the rate of growth, which is not as good as one had expected,” — Bibek Debroy, economist

This is perhaps for the first time that the Reserve Bank of India governor Raghuram Rajan would be feeling some pressure on the eve of announcing the key policy rates.

Amid soundbytes from the finance minister Arun Jaitley and clamour for a rate cut by the industry, Rajan has to make a tough call today on whether to continue inflation fight, or relax rates to push investments.

Meanwhile, there is a variety of opinion from experts and economists on what Rajan may do tomorrow, even as Rajan met finance minister Arun Jaitley on Monday morning at his residence.

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