RBI Is All Set To Cut Interest Rate As Global Easing Takes Shape

India’s Monetary Policy Committee is considering cutting interest rates to benefit Indian businesses. This trend is prevalent in other countries as well. However, this isn’t the only reason behind this consideration. They believe that lowering interest rates will not only make it easier for Indian businesses to borrow. This will also help the Indian economy grow. However, the majority of economists in a Bloomberg survey want the repurchase rate to continue at 6.5% while keeping it neutral. Thus, the economy will neither speed up nor slow down. Let us learn more about interest rate cuts’ positive and negative sides below.

Will RBI Move Towards Cutting Interest Rates?

The demand for lower interest rates is still at its peak. Governor Shaktikanta Das has been avoiding changes for a long time. The main reason behind no change is the rising prices of food items. However, inflation has come down, which is a good sign. The RBI is maintaining the price rates well. However, food prices are still a concern for the government. The US Federal Reserve and central banks are considering rate cuts. It is provoking everyone in India to go in the same direction.

The second major reason is the slow growth of the Indian economy. If we compare it with the last few years, the growth is comparatively lower. Thus, the growth of the economy will pick up a bit with it. Businessmen will be able to borrow money at cheaper rates. This will allow small businesses to take risks. Increasing the risks taken will lead to further advancement of society. Apart from Bloomberg’s economists, HSBC has also shared its opinion. According to him, the RBI should not wait too long. It should cut rates as soon as possible.

Economists at HSBC Plc, Pranjal Bhandari and Ayushi Chaudhary, expect rates to come down to 6% after the rate cut. However, no clear announcement has been made about the changes yet. Discussions are still going on. The decision can be in either favour. Apart from businesses, the consumer economy will benefit from this decision as they will be able to spend more money. There will also be less burden on borrowers. However, nothing can be said until the decision is made. Food inflation has a high chance of moving the inflation from 4% to higher. However, RBI appears closer to this decision and might work towards easing the borrowers. Stay tuned for more information on our website.