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Rate cut to spur growth
Why is it in the news ?
- Reserve Bank of India (RBI) announced another repo rate cut.
- For the fifth consecutive time this calendar year, the central bank cut the repo rate by 25 bps and the reverse repo by 25 bps.
- 100 bps = 1 per cent.
More in the news
- The rate cut may have some effect as banks are supposed to link all new floating rate loans to any of the four external benchmarks.
- External benchmark linked loans are supposed to make transmission of RBI's rate cuts down to the borrower faster.
- After the announcement, the repo rate stands at 5.15 per cent and reverse repo rate at 4.90 per cent.
- The rate cut is expected to reduce EMIs (equated monthly instalments) of borrowers and also make it cheaper to take new loans.
- RBI decided to continue with the accommodative stance.
- Market observers said while the rate cut is a positive move, the market felt disappointed as it was short of expectations.
Source
The Hindu.