With the economic recovery yet to grow deep roots, the Finance Ministry on Tuesday hoped that the Reserve Bank of India (RBI) would maintain status quo in its monetary policy review next week and not signal any hike in interest rates.

Asked whether the government expected the apex bank to continue with the current soft monetary stance, Finance Secretary Ashok Chawla said: “We hope it [the RBI] continues [with the soft stance]” as it is appropriate and justified.

Mr. Chawla was interacting with the media on the sidelines of the launch of the National Skill Development Corporation (NSDC) by Finance Minister Pranab Mukherjee. Parrying a similar query on the issue, Mr. Mukherjee said: “Let us have discussion. The Governor [RBI] is expected to be in Delhi to have discussion with me [and] the Prime Minister. Therefore it is not a question of expectations.” Pressed further on what would be the government’s take on the issue, he merely said: “I will have discussions with him [the RBI Governor].”

Ahead of the monetary and credit policy review, RBI Governor D. Subbarao is expected to have meetings with Prime Minister Manmohan Singh and Mr. Mukherjee on October 23. The general expectation among economic analysts is that the RBI would adhere to a ‘wait and watch’ policy and maintain a status quo on its policy stance in view of the inflationary pressures building up in the economy in the wake of rising food prices.

Keywords: MacquarieRBIinflation

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