The monetary policy committee of the Reserve Bank of India today cut the policy interest rate by 25 basis points to 6.25% in a 4-2 decision. The move could spur banks and non-banking finance companies into reducing their lending rates for consumer and home loans, resulting in lower EMIs for borrowers. In another key move, the central bank changed its stance to ‘neutral’ from the earlier ‘calibrated tightening’.
Here are some of the reactions on RBI policy change :
"The RBI MPC has delighted market participants by changing stance to neutral and cutting repo rate by 25 bps. Q3FY20 inflation expectation cut to 3.9% means some more rate cuts can be expected in the course of the next few meetings. While Bond yields are yet to respond to the rate cut, we think they may start to fall materially when FPIs revise their short term view on India (overcoming their fears on fiscal situation). Equity markets could rise some more, welcoming an attempt to address recent issues in the credit markets, ultimately leading to higher growth."
- Dhiraj Relli, MD & CEO, HDFC Securities
“In his first Monetary Policy Announcement, the RBI governor, Dr. Shaktikanta Das gave a double dovish whammy. The repo rates were cut by 25 bps from 6.50% to 6.25% with immediate effect. In addition, the stance of the monetary policy was also shifted from "Calibrated Tightening" to "Neutral", leaving the door open for further cuts if the data warranted. This cut effectively took the reverse repo rate under LAF to 6.00% and the Bank rate lower to 6.50%."
- Jaikishan Parmar (Sr. Equity Research Analyst - BFSI, Angel Broking)
"As the inflation remains favourable, the RBI has cut repo rate which market was not expecting and thus the rupee appreciated. However this is a temporary phenomenon. Globally crude oil prices are rising gradually and is a matter of concern for the markets. Trade tension and geopolitical matters also remain cause of worry. Hence we expect the rupee to trade in 71-72 range in the near term with the currency continuing it's depreciation bias."
- Rushabh Maru - Research Analyst , Anand Rathi Shares and Stock Brokers