The Monetary Policy Committee, headed by Reserve Bank of India Governor Urjit Patel, is expected to announce a rate cut today. As per the information available, the announcement is expected to be made by 2:30PM today. The announcement will make a major impact on Stock Markets which has already breached 32,000 mark in BSE and even NIFTY reaching an all time high recently.
With retail inflation getting down to as low as 1.54% in June, analysts expect the rate cut would be more aggressive this time by the RBI.
Going by the previous instances, it is expected that RBI may announce a cut in the benchmark lending rate by 0.25% and it is to be noted here that the Central Bank has retained the repo rate at 6.25% for the past 8 months citing risk to inflation.
The six-member Monetary Policy Committee started two-day deliberations amid expectations of at least 0.25% cut in the key lending rate as inflation has cooled to record low levels.
The announcement may bring in some respite to the home loan customers since the rate cut essentially means that there is a drop in their monthly EMI. The last reduction was effected in May. This will be possible only when the Repo Rate is cut since they are linked to bank’s Marginal Cost of Funds Lending Rate(MCLR).
“The MPC will meet on 1 and 2 August 2017 for the Third Bi-monthly Monetary Policy Statement for 2017-18. The resolution of the MPC will be placed on the website at 2.30 pm on 2 August 2017,”RBI had said last month.
Though one of the MPC member, Ravindra Dholakia has advocated for a 0.50% cut in the Repo Rate citing various developments, it will be known only after the meeting is concluded as to what exactly the conclusion is. It was only yesterday that SBI had announced a cut in 50 basis points on avings bank deposits which will have implication on interest rates on various products