In 8th straight cut, RBI slashes key rate 40 basis pts to new all-time low – Times of India

0
30
In 8th straight cut, RBI slashes key rate 40 basis pts to new all-time low – Times of India


MUMBAI: The Reserve Bank of India on Friday unexpectedly cut key interest rates by 40 basis points, citing negative GDP growth in the current fiscal amidst a “double whammy” of loss of production as well as demand even as it said it expected inflation to harden in the first half of the fiscal year. The RBI also allowed lenders to extend an ongoing moratorium on loan repayment, which was due to end on May 31, by another three months to August 31.
This is the second ‘off-cycle’ rate cut by RBI, which advanced its June monetary policy committee meeting to May 20-22. The MPC voted by a 5-1 majority to reduce the policy rate by 40 basis points from 4.4% to an all-time low of 4.0%. Consequently, the Marginal Standing Facility (MSF) rate and the bank rate stand reduced to 4.25% from 4.65%. The reverse repo rate stands reduced to 3.35% from 3.75%. The RBI has cut the repo rate by a total of 115 bps since the lockdown began in late March. It also marks the eighth straight rate cut by the RBI.
“By all counts, the macroeconomic and financial conditions are austere. The global economy is inexorably headed into recession…. Given all these uncertainties, GDP growth in 2020-21 is estimated to remain in negative territory,” said RBI governor Shaktikanta Das while announcing the interest rate cut over a video broadcast. On inflation, he said that given limited data from the National Statistical Office, the RBI could not forecast a number but he expected prices to harden in the first half due to supply-side issues and soften in the second half of the year. The EMI on a 15-year Rs 30 lakh home loan will come down by nearly Rs 2350 since March. The rate cut will immediately result in home loans becoming cheaper for borrowers whose EMIs are linked to the repo rate. These include home loans and other retail loans. Interest rates on deposits are set to come down further given the surge in banks deposits and the fall in credit demand.
“Going forward, we will continue to be vigila

Real More »

LEAVE A REPLY

Please enter your comment!
Please enter your name here