New Delhi: The Reserve Bank on Wednesday slashed benchmark lending rate by 0.25 percent to 6 percent citing reduction in upside risk to inflation, a move that will lower EMIs for home, auto and personal loans.
This is the first rate cut since October 2016 and the interest rate is now at 6-year low.
In line with record low retail inflation, the RBI Governor headed Monetary Policy Committee (MPC) cut policy repo rate by 25 basis points to 6 percent and the reverse repo by similar proportion to 5.75 percent.
The MPC has also decided to keep the policy stance neutral and to watch incoming data with a view to keeping headline inflation close to 4 percent.
Here are the experts’ comments on RBI Monetary Policy Review
SUBHASH CHANDRA GARG, ECONOMIC AFFAIRS SECRETARY IN THE FINANCE MINISTRY
The Reserve Bank of India`s decision to cut interest rates on Wednesday was an “important” step for ensuring sustained economic growth.
“The market was optimistic about a cut and a 25 basis point cut is on expected lines and I am expecting two more cuts of 25 basis points each this year. The U.S. Federal Reserve`s plans on bringing down its balance sheet will not have any impact on the Reserve Bank of India`s future stance.”
ANITA GANDHI, WHOLE TIME DIRECTOR, ARIHANT CAPITAL, MUMBAI
“Economic data suggests that the manufacturing slowdown is immense and it has affected Q4 FY17 GDP. The current level of inflation is at comfortable levels and leaves room for further rate cuts.”
“If RBI gets confirmation that inflation will remain in the lower territory, there is a possibility of a further rate cut.”
“Economic growth has come down substantially, and from that perspective, further stimulus is required for the economy in terms of reduction in the interest rate.”
RAJNI THAKUR, ECONOMIST, RBL BANK, MUMBAI
“We look at the policy rate cut as a knee-jerk reaction to the current growth-inflation dynamics. Central Bank has used the policy space opened up by continued decline in inflationary pressures, reduction in global oil prices and appreciating currency.”