India Inc welcomes RBI move; says rate cut will spur growth

India Inc welcomes RBI move; says rate cut will spur growth

The reverse repo rate was also adjusted to 4.90%.

Repo rate is the rate at which the RBI lends money to commercial banks.

"Several measures announced by the government over the last two months are expected to revive sentiment and spur domestic demand, especially private consumption".

Friday's cut takes the benchmark rate to the lowest in nearly a decade and follows a number of fiscal steps taken by the government recently to spur growth, including a surprise US$20 billion reduction in corporate taxes.

Looking at the cumulative cuts in repo rates in the past, the highest cumulative rate cut in one calendar year, was in 2002, when rates were lowered by 300 bps.

The RBI has reduced report rate for the fifth time this year.

Rate cut may bring cheer among borrowers:When the RBI cuts rates, banks are expected to pass on the benefit to consumers and reduce interest rates on home, auto, personal or other loans which may result in lower EMIs (equated monthly instalments).

Kate Middleton’s statement earrings cost just $8
Kate went on to reveal that curry is their comfort food at home and she often makes some. "Me and heat not so good", he said. While their kids are served no spice food but Princess Charlotte apparently takes after her mom who loves spice.

The RBI also cut its real gross domestic product (GDP) growth forecast for 2019/20 to 6.1 percent from a prior projection of 6.9 percent, citing forward-looking surveys that indicate persistently weak demand conditions will persist.

While the decision to cut the repo rate was unanimous, members of the six-member Monetary Policy Committee (MPC), differed over the quantum.

The MPC noted that "accommodative stance will be maintained as long as it is necessary to revive growth while ensuring that inflation remains within the target", leaving room for more rate cuts in future.

With this downward revision, the monetary policy committee (MPC) has cut the growth forecast by 1.3 percentage points since February.

However, not all economists were as aggressive with their rate cut bets, saying the central bank will likely reserve some firepower and wait to see how inflation pans out.

If the RBI delivers a 25 bps cut as expected, traders will focus on the wording and tone of the monetary policy statement for clues on further easing.

The government has further taken note of higher projection of headline inflation by MPC for 2019-20, which is within the band of 3-4 per cent and well within the target range, it said.

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