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Cut Interest Rates, says Suresh Tendulkar

Batting for stimulation, Suresh Tendulkar, an economic adviser to the PMO said he would like to see interest rates cut further.

“My own preference would be to see some rate cuts there in next week’s policy,” Tendulkar told Bloomberg News in a telephone interview today. “But what happens, that call will be taken by the Reserve Bank.”

Slowing inflation will make things easier for the Reserve Bank of India to lower rates and stimulate demand in an economy growing at the slowest pace in six years, Tendulkar said. Central bank Governor Duvvuri Subbarao has slashed the benchmark repurchase rate by 350 basis points to 5.5 percent since October.

Meanwhile 10 year bond yields are at 5.72%, not quite indicating a cut is expected. (They were at all time lows below 5% a few weeks back, having risen since)