Raghuram Rajan, the RBI governor, has cut the repo rate by 25 basis points, effecting a change in its policy interest rate which now stands at 6.5%. According to Rajan, the cut will help strengthen growth and also ensure that lenders pass on the benefit of lower interest rates to borrowers.
Hope to see significant transmission by banks over next few months, says @RBI Governor #RaghuramRajan on #RBIPolicy. pic.twitter.com/b4KGJy5XjW
— Indiatimes (@indiatimes) April 5, 2016
Effective April 1, the interest rates had started to decline after lenders adopted RBI's new formula to calculate the rates. Rajan also stuck to his "accommodative" stance, positively confirming further rate cuts this year. The central bank has retained its GDP forecast at 7.6%, hopeful for a good monsoon and the recommendations of the Seventh Pay Commission. "Borrowing is now significantly cheaper and will continue to get so," the governor said.If the monsoon is not good enough, there are risks to achieving 7.6% GDP growth: Raghuram Rajan #RBIpolicy
— Business Standard (@bsindia) April 5, 2016
Focus is now on transmission of RBI rate cuts. Monetary policy stance remains accommodative: Raghuram Rajan,#RBI pic.twitter.com/SWxpa70vJj
— ANI (@ANI_news) April 5, 2016
Inflation,transmission of rates and monsoon will determine future monetary policy stance, says Raghuram Rajan #RBI pic.twitter.com/El2uXikxyJ
— ANI (@ANI_news) April 5, 2016