The Monetary Policy Committee of the Reserve Bank of India (RBI) (MPC) has cut the repurchase rate by 25 basis points, and currently stands at 6.25 percent. Tune in to the podcast below to see what stocks and sectors can benefit from the rate cut: the Reserve Bank of India’s monetary policy committee lowered the policy interest rate by 25 basis points to 6.25% on Thursday, a measure that could lead to the reduction of banks Consumer credit rates and housing loans.
At the committee meeting, the first after Shaktikanta Das assumed the position of Governor of the central bank, he also changed his position to “neutral” from the previous “calibrated adjustment”.
The RBI policy is very moderate and indicates more rate cuts. The inflation estimates have been revised very downward by the central bank, according to a Livemint report.
The six-member monetary policy committee voted 4: 2 in favor of cutting rates, while the decision to change the political stance was unanimous. Lieutenant Governor Viral Acharya and another member of the MPC, Chetan Ghate, voted for the status quo in interest rates, while Shaktikanta Das and three others voted for a cut in interest rates.
The monetary policy committee said the rate cut is in line with achieving the medium-term goal of keeping inflation at the 4 percent level and at the same time supporting growth.
“Investment activity is recovering, but it is supported mainly by public spending on infrastructure,” the Reuters news agency quoted the MPC as saying. “The need is to strengthen private investment activity and prop up private consumption.”
The financial markets of India gave some gains while the yields of 10-year bonds slipped 5 basis points after the cut in the surprise rate. The rupee weakened to 71.69 per dollar immediately after the announcement, but soon strengthened to 71.42.