RBI mulls rate cuts to shield the economy from Corona
RBI Governor Shaktikanta Das told reporters that he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed. He observed that there are two channels through which the international epidemic is likely to take a toll on the Indian economy: trade with China & feeble global growth. Inflation, which had prevented the central bank from easing since December, is expected to moderate.
The governor also spoke about the need for coordinated action to contain the situation, given the global nature of this contagion. “I think the G-7 countries are having a conference. And going forward, in the near future, I do expect some discussion through video conference or telephone conference among the central banks of the large economies, including India,” Das was quoted as saying. This is in line with similar stances adopted by his counterparts in Australia & Malaysia. Indonesia, too, is working on a second stimulus package. The Federal Reserve hinted at a possible rate cut last week, while monetary authorities in Japan and the U.K. pledged action to stabilize markets.