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Aug 3
Expect For the Fourth Time RBI Interest Rate Cut in August

Expect For the Fourth Time RBI Interest Rate Cut in August

According to an Indian Economist, RBI is planning to cut rate of interest in the month of August the fourth time in a row majorly because of weak inflation and low rate of growth.

The RBI reducing again the rates this month will be considered as the most aggressive step. Earlier only after the global financial crisis Reserve Bank of India (RBI) made subsequent cuts in interest rate in a row. 

The inflation rate of India has remained below 4% which is the central banks medium term target from almost a year. It is not expected to grow until 2021.

The growth rate of the country was lowered in the recent poll in congruence to the April quarterly economic survey inspite of the three cuts in the interest rate in the current year.  India is expected to grow in the 6.3 – 7.2% range in the every single quarter until the end March 2021. According to most of the economist, the annual growth forecasts were downgraded to 6.8% from 7.2% in the previous poll.

The most of the experienced economist denied when asked if the RBI need to take into consideration core inflation in place of retail inflation as the key step for its monetary policy framework.

The Senior Economist, Shilan Shah at Capital Economics said, “Core inflation is a better measure for underlying price pressures than the headline rate is. So, it should give a better indication of where the economy is in terms of the economic cycle.”  

The factors like the procurement ability of the government, total supply of kharif, and status of monsoon will play a very important role in the actual impact of inflation.

    RBI Monetary Policy Highlight:

    It will have impact on the varied types of debt funds

    It can lower the payable EMIs on auto loans and home loans

    Reduce corporate burden of debts

    RBI will be issuing a NPA classification revised circular soon

    RBI decided to waive off the charges levied on NEFT and RTGS to promote digital transactions

    One of the brokerage firm in the country identified the three major cause for the rate cut including accommodative stance of RBI, CPI inflation was below the RBI’s target of 4%, and of course the evidences of down gradation in the economy. 

    On Monday, the State Bank of India did cut rate of interest on varied deposits across all the maturities as a step for the betterment.

    The sowing activities in fields are expected to increase in August along with July with the regularity in the monsoon. It will play its important part in the economy. It is good news for the farmers dependent on farming for their livelihood in the country. Read More :

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