New Delhi, April 9
The Reserve Bank of India’s (RBI) accommodative monetary policy, combined with the government's growth-centric fiscal policy, will help boost domestic growth amid global economic turmoil, the Confederation of Indian Industry (CII) said on Wednesday.
Terming the central bank’s decision to continue with the rate easing cycle by reducing the repo rate by 25 basis points to 6.0 per cent as “timely and prudent,” Chandrajit Banerjee, Director General of CII, said the rate cut coupled with the shift in monetary policy stance from 'neutral' to 'accommodative,' too, is a big positive.
"This change, which CII has long advocated, firmly emphasises the Central Bank's pro-growth approach while maintaining vigilance regarding inflation outlook,” Banerjee said in a statement.
The RBI’s rate cut, and stance change, reflect concerns about the impact of slower global growth on domestic economic growth and a relatively benign outlook for domestic inflation.
Moreover, with real interest rates being still high at 2.6 per cent after the rate cut in February, there was an urgent need for the rates to come down further to boost investment demand, according to the apex industry chamber.
The benefits of this rate cut are set to be passed to the consumers on an immediate basis, which will be crucial to boost consumption. Lower borrowing costs can aid housing affordability too.