Economists call for at least 25 bps rate cut by RBI

Economists call for at least 25 bps rate cut by RBI

The Reserve Bank of India on Thursday lowered the repo rate, or the interest rate at which it lends to commercial banks, by 25 basis points to 6%.

For the FY 2019, RBI conducted their first bi-monthly monetary policy meeting and decided that a rate cut is necessary at this point of time.

Days before Lok Sabha Elections 2019 kickoff, India's apex bank: RBI, has announced a reduction in a rate cut for all banks.

Accordingly, the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent. However, the central bank retained its stance for the monetary policy at "neutral". However, RBI has kept the rates unchanged in the last two monetary policy announcements held in October and December 2018 this fiscal.

SMEs, financial experts, and the industry, in general, is quite happy with the decision, as lower interest rate means that more consumers will now open up for loans. "The need is to strengthen domestic growth impulses by spurring private investment which has remained sluggish", it noted.

As per Anarpck Consultants, back-to-back repo rate cuts by the RBI are indeed the flawless start to a new financial year, resulting in overall reduction of 50 basis points since February 2019. In the last one in February, the committee had cut repo rate by 25 basis points from 6.50 per cent to 6.25 per cent.

Leonardo Bonucci: Kean abuse comments 'misunderstood'
He said: " Kean knows that when he scores a goal, he has to focus on celebrating with his teammates". What's more, Keane only done so after he had been at the end of the abuse for most of the game.

While the central bank projected retail inflation at 3.8% by January-March 2020 - within its target of 4% - it also warned of the upside risks to price pressures if food and fuel prices rose abruptly, or if fiscal deficits overshot targets.

Since then, there are some signs of domestic investment activity weakening as reflected in a slowdown in production and imports of capital goods, it said after the three-day meeting of the Monetary Policy Committee (MPC).

Consequently, it lowered the country's growth projection for 2019-20 to 7.2 per cent.

It added that several uncertainties cloud the inflation outlook, with the domestic and global demand-supply balance of key food items expected to remain favourable.

"No substantial relief is expected for borrowers in their monthly loan installments as banks are unlikely to induce a large cut in their benchmark lending rates" Gupta said.

"The moderation of growth in the global economy might impact India's exports", the central bank said.

Related Articles