Raghuram Rajan Surprises Again, Cuts Repo Rate to 4- Year Low

[Sai Jai]

Reserve Bank Governor Raghuram
Rajan on Tuesday cut the benchmark
repo rate by 50 basis points to a 4-1/2
low of 6.75 per cent in a surprise move.
Most analysts polled by Reuters
expected the central bank to slash
rates by 25 basis points or 0.25 per
cent.
Tuesday's repo rate cut is the biggest
single monetary policy move taken by
Dr Rajan and it takes the repo to its
lowest since March 2011. (Read: 'I Do
What I Do': Top 5 Raghuram Rajan
Quotes )
The repo rate cut is expected to help
boost domestic demand at a time when
the industry is still struggling with
under-capacity and weak corporate
investments, analysts said.
Dr Rajan said the 50-basis point repo
rate cut should not be viewed as an
aggressive move. Many conditions laid
down by the RBI in the previous policy
announcement in August had been
met, paving way for a sharper rate cut,
he added.

 

[Sai Jai]

"I don't think we were excessively
aggressive... it's not a Diwali present,"
he said. ( Read)
The big rate cut is expected to bring
cheer to millions of consumers who
pay home loans EMIs or are looking to
take a loan. Dr Rajan said he will work
with the government to ensure
effective transmission of interest
rates.
"While the Reserve Bank's stance will
continue to be accommodative, the
focus of monetary action for the near
term will shift to working with the
government to ensure that
impediments to banks passing on the
bulk of the cumulative 125 basis points
cut in the policy rate are removed," Dr
Rajan said.

 

[Sai Jai]

Source: Raghuram Rajan Surprises Again, Cuts Repo Rate to 4-Year Low

 

[iSK]

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