RBI cuts lending rates to 9-year low |
With the Reserve Bank of India cutting the policy rate by 0.25 percentage points to 5.75%, Corporate and consumer loans are expected to get cheaper. The rate cut is RBI`s third consecutive rate cut this year, in an attempt to reverse the slowdown in economic growth and boost consumer spending. The policy rate is now the lowest since July 2010, a year when the RBI effected a staggering six interest rate increases to combat stubborn inflation. RBI governor Shaktikanta Das said that, Inflation is now well under control, and in its bi monthly monetary policy review, the monetary policy committee (MPC) of RBI also changed its policy stance to “accommodative” from “neutral”, which means that it could cut the rate again, and then again, if growth doesn`t pick up. RBI`s move highlights growing concerns in the central bank and also in government circles about growth. On Thursday, the government set up a special Cabinet committee of senior ministers to deal with growth and investment-related issues. According to data, India`s gross domestic product growth rate slipped to a five-year low of 5.8% in the January-March quarter and that the annual growth slowed to 6.8% in FY19. Against this backdrop, RBI has revised its growth forecast for 2019-20 down to 7% from 7.2%.
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