After a larger-than-expected interest-rate cut on Tuesday, the Reserve Bank Of India (RBI) governor, Raghuram Rajan, said: “My name is Raghuram Rajan and I do what I do.”
He said that in reply to a question from a journalist who said he was being Santa Claus in cutting interest rate or should his statement be read as hawkish.
Rajan had cut interest rate by 50 basis points, the biggest in more than three years. The cut brought down repo rate to 6.75 percent, the lowest in four-and-half-years.
Asked why RBI cut interest rate by 50 bps, the RBI governor said:
“We want to make sure that word sustainable and growth go together. Both are are important. And that’s why we used what room we had. But I don’t think we were excessively aggressive. We were not throwing out Diwali bonus.”
Appreciating Rajan’s move, Finance Minister Arun Jaitley said that this will support growth and added that the government would like to see commercial banks reciprocating with their own interest rate cuts.
After the announcement by RBI, Andhra Bank cut its benchmark lending rates by 0.25 percent. The other banks are likely to follow suit.