Repo rate cut to 7.2 per cent from 7.5 per cent despite the high risks to inflation
RBI Governor Raghuram Rajan
Mumbai: The State Bank of India and three other banks were quick to reduce their base prime lending rates Tuesday, hours after the Reserve Bank of India cut its repo rate (that at which banks borrow from the RBI) by a quarter per cent, but borrowers may have to wait a little longer to see how this translates into bringing down monthly instalments in auto, housing and other loans.
RBI governor Raghuram Rajan cut the repo rate to 7.2 per cent from 7.5 per cent despite the high risks to inflation, and said the banks should pass on cuts to consumers.
Dr Rajan said as banks had started to pass on the past rate cuts, inflation was down and the impact of unseasonal rains had been moderate so far. But he added that there was also a case for a cut in policy rates, announcing his second bi-monthly monetary policy statement 2015-16, because of “low domestic capacity utilisation, still mixed indicators of recovery and subdued investment and credit growth”.
( Source : dc correspondent )
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