RBI Cuts Key Repo Rate

(Reuters) – The Reserve Bank of India (NSE:BOI) (RBI) has reduced its key repo rate for the first time since May 2020, aiming to stimulate a sluggish economy projected to grow at its slowest pace in four years.

The Monetary Policy Committee, made up of three RBI and three external members, cut the repo rate by 25 basis points to 6.25%, after keeping it unchanged for 11 consecutive policy meetings.

Commentary

Shishir Baijal, Chairman and Managing Director, Knight Frank India, Mumbai:
> “We hope that interest rate cuts will be passed on to consumers, making home loan rates more attractive. This should stimulate residential demand across various price brackets, especially in the under ₹5 million category.”

Radhika Rao, Senior Economist, DBS Bank, Singapore:
> “The RBI’s MPC voted unanimously for the rate cut, taking a cautious view on growth while winter disinflation in food is expected to mitigate risks to price stability. Recent rupee depreciation was not a hurdle for policymakers.”

Anirudh Garg, Partner and Fund Manager at InAsset PMS, Mumbai:
> “The rate cut could positively impact the auto sector by making vehicle loans more affordable, encouraging consumer demand, particularly in the passenger and two-wheeler segments.”

Sachchidanand Shukla, Group Chief Economist, Larsen & Toubro, Mumbai:
> “The rate reduction buys some growth insurance in a hugely uncertain global environment.”

Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram:
> “Although the policy tone was neutral, the governor’s remarks suggest a more pragmatic approach to regulations.”

Devendra Kumar Pant, Chief Economist, India Ratings and Research, Gurugram:
> “The rationale for the rate cut is a sustained decline in retail inflation, based on the assumption of no supply-side shocks.”

Garima Kapoor, Economist, Institutional Equities, Elara Securities, Mumbai:
> “The assurance of liquidity provision was comforting and suggests that measures are likely to continue through OMOs and swaps.”

Gaura Sengupta, India Economist, IDFC First Bank, Mumbai:
> “The decision signals a gradual shift towards less-restrictive monetary policy, as inflation is expected to align with target levels.”

Deepak Agrawal, CIO Debt at Kotak Mahindra AMC, Mumbai:
> “The rate cut combined with liquidity assurances should help boost consumption and revive growth.”

Anuj Puri, Chairman, Anarock Group, Mumbai:
> “The RBI’s decision to reduce the repo rate is expected to positively impact the housing sector, particularly for affordable housing buyers.”

Kunal Kundu, India Economist, Societe Generale, Bengaluru:
> “A rate cut was appropriate to support domestic demand, which is clearly on a weaker footing.”

Boman Irani, President, Confederation of Real Estate Developers’ Associations of India, Mumbai:
> “The repo rate cut complements recent budget measures designed to boost spending and stimulate economic growth.”

Upasana Bhardwaj, Chief Economist, Kotak Mahindra Bank, Mumbai:
> “The MPC’s decision to cut the repo rate and maintain a ‘neutral’ stance is in line with expectations as it softens growth and inflation outlook.”