Out of 45 banks in the country, only three banks had cut lending rates in January when the RBI had, in a surprise move, slashed repo rate by 25 basis points.
There are three distinct features in the latest rate cut. One, this is the second “out of policy” cut, after the surprise cut in January.
Observing that democratic accountability is very strong in India, Rajan says ‘we may have a long way to go’.
He also warned that strong governments may not always move in the right direction.
Banks readily borrow from RBI at the policy rate but then lend that money out at a high rate…
How much we make will depend on the interest rate, how much is exported will depend on the exchange rate.
The RBI had front-loaded the rate cut on January 15, its first repo rate reduction in almost two years.
Most forecasts of repo rate cuts needed in India this year seem to be out of sync with the underlying trend of inflation and growth in India and the world.
Why smart capitalists should demand an inheritance tax.
The RBI governor defended his decision not to lower interest rates at his last monetary policy review.
Most expert views in India are in fact an ex-post opinion for every ex-ante fact.
Being a rate-sensitive sector, realty has been under stress over the last couple of years as high rates kept home buyers away.
Most other economies do not have the rate cut option as their rates are low, and inflation is high.
Analysts are expecting the interest rate to be cut by 75 basis points during the course of this year or perhaps next fiscal.
The RBI announced a 25 basis points cut in the Repo rate ahead of its monetary policy meeting.