Reserve Bank of India Governor Raghuram Rajan on Wednesday said he was quoted “out of context” by the media when talking about inflation and interest rates at an event that was supposed to be “closed-doors”.
The clarification came on a day when Dr Rajan surprised markets by cutting repo rate at an inter-policy meet for the second time in less than two months.
At a conference call, analysts quizzed Dr Rajan about the sudden change in his stance as one day ago he was quoted by the media as saying, “RBI is unable to cut interest rates very quickly due to “high” inflation.”
“I don’t think there was any misleading of the markets, but I apologise,” Dr Rajan said. “It was a closed door meeting. You should have seen the context of what was discussed then you would have realized I’m not talking about our current inflationary path and our current monetary policy,” he said.
The Governor said he was talking about the fact that internationally central banks had brought interest rates down to zero and it was very hard for India to follow because the country had higher inflation.
Such “half-baked news reports” indeed tend to confuse the market, he added.
Dr Rajan told analysts that he was talking about the RBI not being able to “cut rates quickly to the bone, which means down to zero.”
“This comes from paying attention to closed doors events which should not have been reported outside and I apologise to the wider public, but there were no reporters supposed to be present, this was a direct interaction with students,” he said.