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A Rate cut that was widely anticipated and priced in was delivered by the RBI MPC. Policy rate reduction was clearly a question of timing in the current context considering the evolving situation on the currency led by global factors and capital flows. At the same time, there has been no change in stance or any other provision of liquidity support. While the rate cut was clearly subjective, the lack of specifics on liquidity could potentially impeded transmission. While yields have moved up a bit, it is anticipated that the RBI would continue to ensure targeted infusion of liquidity over the coming months that should enable yields to stay anchored. Overall, the weaker than anticipated growth over the previous year and projection on CPI for FY26 closer to the target has provided confidence to the RBI to ease rates
A Rate cut that was widely anticipated and priced in was delivered by the RBI MPC. Policy rate reduction was clearly a question of timing in the current context considering the evolving situation on the currency led by global factors and capital flows. At the same time, there has been no change in stance or any other provision of liquidity support. While the rate cut was clearly subjective, the lack of specifics on liquidity could potentially impeded transmission. While yields have moved up a bit, it is anticipated that the RBI would continue to ensure targeted infusion of liquidity over the coming months that should enable yields to stay anchored. Overall, the weaker than anticipated growth over the previous year and projection on CPI for FY26 closer to the target has provided confidence to the RBI to ease rates
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The Reserve Bank of India has cut the repo rate by 25 basis points, to support economic growth while balancing the macro and geopolitical factors. Retail inflation has moderated, and the RBI had recently announced liquidity support of Rs 1.5 lakh crore, this could well support its decision to start the monetary easing cycle. Additionally, the recently announced tax relief and benefits in the Union Budget are expected to positively impact the economy by boosting consumption and investment. As a result, loans will become more affordable, providing much-needed relief to individuals. Timely transmission of the rates will be key to make loans affordable.
The Reserve Bank of India has cut the repo rate by 25 basis points, to support economic growth while balancing the macro and geopolitical factors. Retail inflation has moderated, and the RBI had recently announced liquidity support of Rs 1.5 lakh crore, this could well support its decision to start the monetary easing cycle. Additionally, the recently announced tax relief and benefits in the Union Budget are expected to positively impact the economy by boosting consumption and investment. As a result, loans will become more affordable, providing much-needed relief to individuals. Timely transmission of the rates will be key to make loans affordable.
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Will RBI Governor Sanjay Malhotra kick off his RBI innings with a 25 bps rate cut in debut MPC meeting?
Will RBI Governor Sanjay Malhotra kick off his RBI innings with a 25 bps rate cut in debut MPC meeting?
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