Markets

RBI gives in finally, cuts repo rate to lowest since 2010

RBI gives in finally, cuts repo rate to lowest since 2010

The reverse repo, at which RBI borrows from banks, has been readjusted accordingly by similar percentage point to 5.75 per cent.

The repo rate - the rate at which the RBI lends to banks - now stands at 6%.

# In June, retail inflation measured by year-on-year changes in the CPI plunged to its lowest reading in the series based to 2011-12.

RBI Governor Urjit Patel said inflation trajectory now incorporates the first round impact of the implementation of the HRA awards of the 7th CPC by the central government.

Under the MCLR rate-setting method, banks calculate the benchmark lending rate by using the cost incurred on incremental deposits, not average cost of deposits. "India's inflation has undergone a structural shift, with the emergence of "new normal" at lower levels".

Gainesville police reject President's Trumps remarks about treatment of suspects
And as the President noted in a recent interview with The New York Times, "there are very few Republicans in Baltimore, if any". The comment elicited laughter and applause from some, including uniformed law enforcement, in the audience.

Now the biggest question is will banks slash home loan interest rate?

Pankaj Bansal, Director, M3M Group: RBI's decision to lower the repo rate is on expected lines.

On the rate of price rise, Patel said: "The Monetary Policy Committee observed that while inflation has fallen, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive". "This rate cut was long called for, particularly as inflation is at record low and GDP growth has also lost some sheen", said Harsh Pati Singhania, Director, J.K.Organisation and Vice Chairman & Managing Director, JK Paper. This will ensure uplifted property demand in the near future and also boost the affordable housing segment. "The prudent approach of the central bank in reacting to incoming data in a calibrated manner will reinforce confidence amongst global investors", ICICI Bank CEO Chanda Kochhar said. The monetary policy committee (MPC) maintained its neutral monetary policy stance after its third meeting for the current fiscal. Many of them had hoped for a 50 bps cut as good monsoons, favorable global environment and new reforms provided the ideal platform to aggressively cut rates. "Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap". Bringing the Repo rate from 6.25 to 6 percent, the loans, after this announcement, are anticipated to get cheaper.

"So, the MPC chose to keep the policy stance neutral and to watch incoming data".


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