'Slash Rates As Inflation Cools': MPC's Jayanth R Varma

Jayanth R. Varma, an External Member of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC), emphasizes the need for lower interest rates as inflation cools. He suggests that if inflation continues to decline, it is essential to keep cutting interest rates. According to Varma, a real interest rate in the range of 1% to 1.5% should be sufficient to achieve the RBI’s inflation target1. His perspective aligns with the goal of maintaining medium-term consumer price index (CPI) inflation at 4%, with a permissible band of +/- 2%, while also supporting economic growth.