Low inflation, not public pleading, should drive rate cuts: Raghuram Rajan

Rate cuts should not be seen as goodies that the RBI gives out, he said

Interest rate cuts should only be delivered after sustained low inflation, and not as "goodies" doled out after public pleading, Reserve Bank of India Governor Raghuram Rajan said on Monday.

"Rate cuts should not be seen as goodies that the RBI gives out stingily after much public pleading," Rajan said in a speech to a banking event.

"Instead, what is important is sustained low inflation," he added. "And rate cuts are a natural consequence that the RBI has no hesitancy in delivering."

The comments come as corporate executives and Finance Minister Arun Jaitley is stepping up pressure on the RBI to cut rates as the economy struggles and price rises slow.

The RBI kept its policy rate on hold at 7.25%, at its last policy review earlier this month, while leaving the door open to ease further depending on the inflation outlook and how swiftly banks lower their lending rates.