Jaipur: Pitching for cut in policy rates, country's largest bank SBI on Friday said the Reserve Bank should now focus on growth as inflation has eased. "In my opinion, this is the time to focus on growth because a lot of ... has been done for inflation control and the level of inflation is not that high now," State Bank of India Chairman Pratip Chaudhuri told reporters in Jaipur.
RBI was balancing inflation and growth rate, he said, adding if the growth rate is ignored, it would bring very dangerous results. The Reserve Bank on Friday said its monetary actions in the coming months will be determined by the outlook on monsoon and ensuing impact on inflation. Earlier this week, RBI Governor D Subbarao had said the central bank was sensitive to growth concerns but not at the cost of higher inflation.
Inflation fell to over three-year low of 4.89 per cent in April on softening food prices. Retail inflation also fell to a 4 month low of 9.39 per cent in April, indicating that inflationary expectation is on declining trend. "I think liquidity be raised, CRR be cut down, and raise the export credit which was very slow or halted," he said. The SBI Chairman expressed serious concerns that the country's growth rate was reduced below 5 per cent.
The RBI is scheduled to unveil its first mid-quarter monetary policy review on June 17. There is pressure on central bank to cut policy rate in view of declining inflation and the urgency to boost sagging growth. In its monetary policy last month, the apex bank lowered the short-term lending rate to 7.25 per cent from 7.50 per cent while retaining the CRR unchanged at 4 per cent.
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