Finance Ministry looks forward to RBI to support revival of growth, employment

With the Reserve Bank of India (RBI) keeping interest rates unchanged, the government on Tuesday said it is looking forward to the central bank to support revival of growth and employment.

In a statement, the Finance Ministry said it was encouraging that RBI has taken note of the structural change in the outlook for inflation.

"The government looks forward to the RBI supporting the revival of growth and employment," the statement said.

Referring to the proposed new monetary policy framework, the finance ministry said in the weeks ahead, the government and the central bank will work towards it.

The framework would "help institutionalise the gains achieved on the inflation front, so as to reduce inflationary expectations and further support the revival of investment and growth", the ministry added.

Earlier in the day, RBI Governor Raghuram Rajan said talks with the government had progressed well and the details would be announced soon.

The new monetary policy framework involves setting a formal inflation target and accountability to deliver on the same. The central bank has set the inflation target for January 2016 and beyond at 4 per cent (plus or minus 2 per cent).

In its policy review, the RBI said, "If the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle."

The apex bank on Tuesday kept interest rates unchanged for fifth time in a row. The repo rate is unchanged at 8 per cent while the cash reserve ratio (CRR) has also been retained at 4 per cent.

Meanwhile, the country's economic growth slowed to 5.3 per cent in the second quarter of current financial year, from 5.7 per cent recorded in the April-June quarter.