New Delhi, Feb 5 (IANS) The Reserve Bank of India (RBI), in all likelihood, is set to cut the repo rate by 25 basis points for the first time in almost five years, aligning with the Budget’s objectives of stimulating economic activity while managing a prudent fiscal position, which provides comfort on currency and inflation fronts, industry experts said on Wednesday.
The central bank last reduced the repo rate by 40 basis points to 4 per cent in May 2020, to help the economy tide over the crisis following the Covid-19 pandemic. Currently, the repo rate stands at 6.50 per cent.
Given the Union Budget’s emphasis on reviving consumption to support economic growth, the RBI might consider turning the policy rate cycle.
Additionally, the government’s balanced borrowing plan and efforts to enhance liquidity could support a favourable environment for such a rate cut, said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
A rate cut will be beneficial for the real estate sector as it will make borrowings more affordable for home buyers and reinstate consumer sentiment, particularly in the lower and mid-income segments.
It will also potentially enhance liquidity in the banking system making it easier for developers to access financing for their projects.
According to Bajaj Broking Research, the potential rate cut is coming after the domestic rate-setting panel has kept the policy repo rate unchanged for the last 11 consecutive meetings — after raising it by 250 bps between May 2022 and February 2023.
The Union Budget prioritises consumption and fiscal discipline, leaving room for the central bank to stimulate growth. With GDP growth slowing to a seven-quarter low of 5.4 per cent in Q2 FY25, a rate cut seems imminent, said the report.
RBI’s recent liquidity measures aim to stabilise the financial system, reinforcing expectations of monetary easing.
The central bank’s MPC shifted to a neutral stance in October last year, providing flexibility in policy decisions. Economists expect no change in this stance in February, with a shallow rate cut cycle anticipated.
“While the RBI ensures sufficient liquidity, a CRR cut is unlikely in the next policy announcement, as the central bank maintains a supportive financial environment,” the report mentioned.
–IANS
na/vd
Disclaimer
The information contained in this website is for general information purposes only. The information is provided by TodayIndia.news and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of TodayIndia.news We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, TodayIndia.news takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
For any legal details or query please visit original source link given with news or click on Go to Source.
Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.
If you are not willing to accept this disclaimer then we recommend reading news post in its original language.
