RBI slashed Repo rate.
RBI governor Sanjay Malhotra announced repo rate cut of 50 bps. Accordingly repo rate dropped to 5.5 percent.The decision to slash repo rate declared after the Monetary Policy Committee(MPC )meeting.In his words "Geopolitical tensions and weather vagaries pose headwinds". Considering such circumstances the MPC retained the GDP growth forecast of the current fiscal year at 6.5 percent.
Benefts
The rate cut is likely to benefit bond and also beneficial to borrowers because private and public sector bank will reduce their lending rates in tune with current repo rate. In this context a reduced lending rates will attract home loan customers.Therby the decision of rate cut may boost overall economic activities especially for the housing, auto and infrastructure sector.Employment opportunity in infrastructure development will also be improved.
Consumer Price Index declines
The MPC calculated inflation for 2025-26 to be at 3.7% lower than the 4% estimated for the previous year backed by expectations of a good monsoon.The estimated 3.7 inflation is within comfort zone.