RBI Governor is on an aggressive mood as he cut rates and made it cheaper for Banks to raise funds. The central bank slashed repo rate that is the rate at which banks borrow from the RBI by 25 basis points, from 6.75 % to 6.50% signalling its belief that prices of goods were in moderation. This will in turn help the borrowers in way of reduced EMI’s on housing loan borrowers with floating rate clause. Thus the borrowing costs will be lower as of now for both house as well as car loans. This is a great boost to the borrowers from Banks. All the eyes were glued on the RBI’s policy review in March and most analysts expected the central bank to cut interest rates before the budget. RBI and Rajan are for robust growth and Industry is myopic about the cut in interest rate. At the same time it put a rider and it could definitely ease our monetary policy for the coming years provided inflationary pressures do not reappear and the government controls the fiscal deficit. The door is now open after cut in interest rates and it is time to feel sea the change in borrowing power of the people. RBI rules the roost and Raghuram Rajan make Modi’s dreams come true with his positive approach and his dedication for the job in his hand.
(The views expressed by the author in the article are his/her own.)