Little room for further easing with RBI's take on real rates

Mumbai

THE Indian central bank governor's goal of encouraging savings to finance growth in Asia's third-largest economy leaves him almost no room to lower benchmark borrowing costs for at least six months.

Raghuram Rajan cut the Reserve Bank of India's repurchase rate last week for the fourth time this year, using up the "maximum room" allowed by the outlook for prices and the need for an inflation-adjusted return of 1.5 to 2 per cent to boost the slowest savings growth in a decade.

Although the so-called real rate is usual…