Industry chambers have asked the Reserve Bank of India to take cues from the US Federal Reserve for reducing interest rate to strengthen the macro-economic fundamentals of the economy. CII pointed out that with the inflation rate hovering at a comfortable 3%, it was the right time for RBI to cut repo and reverse repo rates by 25-50 basis points. "This move would strengthen the economic fundamentals and also boost investors' confidence," CII said in a statement. The chamber said the decline industrial output in the recent months could trigger a slowdown in the manufacturing sector, especially in the consumer durables industry, which has witnessed a 1.7% fall in growth in April-November 2007. In its recommendations for the quarterly review of monetary policy, CII president Sunil Bharti Mittal expressed concern over high interest rates affecting investments. Reducing interest rate would go a long way in boosting demand and investments, Mr Mittal said, adding that it would also reduce the operating costs for small and medium-sized exporters whose profit margins have seen a big squeeze due to the appreciating rupee. FICCI termed the US Fed cut a signal for the soft interest rate regime globally. "RBI must cut repo rate by at least 25 basis points this month itself and then follow up with further cut of another 25 basis points within next two months," the chamber said. FICCI said its latest business confidence survey, released in December 2007, showed that while initially the high interest rates affected the consumer goods industry, now even the intermediate and capital goods sectors are getting impacted. "The policy implication emerging out of the survey is very clear - RBI must ease the monetary policy stance and slowly make it more accommodative. Failure to do this would send the industry into a downward spiral and make recovery particularly difficult," it added. – www.economictimes.com