New Delhi: Home, auto and corporate loans would cost less after RBI on Tuesday cut interest rate by 50 basis points or 0.5 percent to spur investment and growth. After the rate cut, the repo rate stands at 4-year low of 6.75 percent while the reverse repo rate stands at 5.75 percent. The RBI has kept the CRR unchanged at 4 percent.
RBI Governor Raghuram Rajan said RBI will continue to be vigilant for signs that monetary policy adjustments are needed to keep economy on target disinflationary path. We want to make sure the words sustainable and growth go together. Both are important,” Rajan Said.
RBI has cut FY16 real GDP growth estimate to 7.4 percent while expecting that growth will pick up towards the latter part of the fiscal. RBI has said that inflation is expected to reach 5.8 percent in January 2016.
The January 2016 target of 6% inflation is likely to be achieved. Therefore, the focus now shifts to bringing inflation to around 5% by the end of fiscal 2015-16,” the RBI Governor said.
As regards the price situation, the wholesale price index (WPI) remained in the negative territory for 10 months in a row and stood at (-)4.95% while retail inflation eased to a record low of 3.66% in August.
Global turmoil triggered by devaluation of the yuan and reports of a slowing growth in China have impacted Indian currency and stock markets. The first quarter GDP print of 7% was below market expectations while industrial output growth in April-July came in at 3.5%.
Bureau Report
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