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Topic: RBI rate cut
One reason for RBI’s reluctance may be worries that deeper rate cuts could worsen outflows and weaken the rupee, according to investors.
With inflation expected to decline in the coming months, it will allow the Reserve Bank of India to keep the door open for more policy easing to boost credit demand.
The RBI implemented a series of five consecutive rate cuts starting February this year by a cumulative 1.35%, a move, governor Shaktikanta Das says, had surprised markets early in the year.
A majority of economists surveyed by Bloomberg News expect a quarter-point cut, with the rest expecting reductions of 15 to 50 basis points.
RBI has already cut interest rates by 135 basis points in five moves this year & last week’s weak data gives it added reason to continue pushing for growth.
The economic crisis can be fixed only with genuine, brave reform. If this Modi govt can’t do it, it will confirm fears that it has lost its mojo.
The S&P BSE Sensex fell 1.1% and NSE Nifty 50 Index was down by 1.2% which marks the worst performance since May.
The repo rate cut, the 5th in a year the economy has seen a slowdown, is aimed at pushing up consumption during festival season by lowering borrowing costs.
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The govt should restore Department of Economic Affairs’ role of pushing for reform & productivity growth by looking beyond short-term & sectoral issues.
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