The Reserve Bank of India (RBI) on Tuesday cut its key lending—the repo rate—by 25 basis points to 6.25 percent, as a newly set up panel felt that inflation levels were low enough to reduce loan rates.
The decision of the monetary policy committee (MPC), headed by new RBI governor Urjit Patel, will likely cheer business leaders and households as cheaper loans will aid investment and spending.
The six-member Monetary Policy Committee, which voted 6-0 in favour of a cut, noted that an improvement in sowing along with supply management measures will improve the food inflation outlook.
The committee also noted "potential cost push pressures that may emerge, including the 7th pay commission award on house rent allowances, and the increase in minimum wages with possible spillovers through minimum support prices" but said that on balance, a rate cut was warranted.
A lower repo rate—the rate at which banks borrow from RBI--would mean households may expect cheaper bank loans to buy houses and goods such as cars, which peak during the festival shopping season in October and November.
Since January 2015, the RBI has cut the repo rate six times. India’s retail inflation has touched a five-month low of 5.05 percent in August, triggering hopes of a rate cut.
The RBI and the government have set a retail inflation target of 4 per cent for the next five years with an upper tolerance level of 6 percent and lower limit of 2 per cent.
Get real time advice for Stock Trading tips , Best Accurate Stock Tips , Stock Market Live , Equity Tips and all Maket Updates From Capitalstars .
Making an Investment Arrangement
ReplyDeleteWe are all used to making strategy and plans. We make them consistently, at work and at home. Making a shopping list is a plan. For meetings setting up an agenda and is the example of planning. Step by step instructions to orchestrate your accounts is a standout amongst the most vital choices you need to make. So ensure you take a seat and plan carefully. It is usefull to build up an investment plan that you hold fast to, and just change when there are huge changes in the fundamental variables.
Stock Cash tips
Stock Future Tips