(Reuters) -India’s central bank expects inflation for the full year to be below 3.7%, governor Sanjay Malhotra told CNBC-TV18 on Tuesday, adding that the monetary policy committee will look at the inflation outlook, and not just current data, while deciding further rate moves.
Annual retail inflation in India slowed to a more than six-year low of 2.10% in June, on the back of easing food prices, data showed on Monday.
The inflation print was near the lower range of the Reserve Bank of India’s tolerance band, and could pave the way for another rate cut in the second half of the year, economists said.
The governor said on Tuesday that a liquidity management framework is likely to be announced before the end of July.
An internal working group is looking at the liquidity framework and the report should be out by the end of July, but “I do not expect any major changes,” Malhotra said.
He said that the central bank continues to target the interbank call money rate, and added that it should remain within the policy rate corridor.
“The operating target for the monetary policy is very clear, which is call money rate, and we are only looking at that. We are not looking at TREPS rate or market repo rate,” Malhotra said.
“The effort would be to keep the call money rate as close to the policy rate as possible, and that will also help in transmission,” he said.
TREPS refers to tri-party repo market, where participants apart from banks and insurance companies, lend and borrow funds.
Malhotra also told CNBC-TV18 on Tuesday that the central bank is reviewing rules for ownership of banks.
(Reporting by Dharamraj Dhutia and Ananta Agarwal; Editing by Mrigank Dhaniwala)
