RBI will cut repo rates, say experts
Posted on: 28/Sep/2015 9:45:36 AM
The RBI (Reserve Bank of India) will cut its repo rate this week, say experts. The experts and analysts say that the country`s central bank will cut the rate by at least 25 basis points to 7%. This will be the lowest rate in 4 years.
Say the analysts, We expect the RBI to cut the policy repo rate by 25 basis points at the upcoming policy meeting on September 29. It (RBI) had laid out three conditions for more easing in the last policy meeting. Its first condition of inflationary pressures receding has been met... The second condition of sufficient monsoon, while not technically met, is not yet posing a huge problem. The third condition of the impact from US Federal Reserve`s action stands good for now. With the Fed staying on hold in September, pressures on emerging market currencies have eased, providing a window for the RBI to cut rates... For a central bank in an accommodative mode, these three, in our view, should be sufficient in its bid to support economic recovery.
An official from Assocham said, A cut in interest rates is required to act as a demand push at the consumer level while at the same time, to help revive investment cycle, particularly in the private sector. Rather than a small cut, at least a 50 bps reduction in repo with a clear message to the banks to pass on the same, should be pushed.
