New Delhi
The Reserve Bank of India (RBI) may further cut interest rates in the coming months. This is expected to speed up the economy. The central banks of developed countries are paying more attention to inflation, but the priority of the Reserve Bank is currently promoting development. If different interest rates are re -cut, then home loans, car loans etc. will become cheap. Also, the burden of EMI will also be reduced.
The Reserve Bank believes that inflation rate will soon come under the limit fixed by the government. For this, he can take several steps besides cutting interest rates. This is known by the details of the recent meeting of the Monetary Policy Committee (MPC). The meeting was held on Friday. Please tell that this month was a meeting of MPC from 5 to 7 February.
25 basis points are cut
The Reserve Bank announced the decisions taken at the meeting on 7 February. At that time the central bank cut the repo rate by 25 basis points. It has now reduced 0.25% to 6.25%. This was the first time in 5 years when interest rates were reduced. Now its effect is starting to appear. Many bank interest rates including SBI and PNB have reduced interest rates and people are getting cheaper loans.
Inflation will be reduced
The MPC also indicated that global trade challenges would have little impact on inflation. Also, high actual interest rates give a chance to reduce the cost of debt. Real interest rate means the difference between interest rate and inflation rate. If the interest rate is high and inflation is low then the actual interest rate is high.
What is the plan of the Reserve Bank?
The external members of the MPC who were in favor of cutting interest rates in the previous two meetings believe that the current monetary policy is very strict. In view of the decline in debt growth, it is necessary to reduce interest rates to promote consumption and investment. That is, the Reserve Bank can further reduce interest rates in the coming days.
‘This is the most suitable time of rate cut’
The new Governor of the Reserve Bank Sanjay Malhotra supported the interest rate cuts at his first MPC meeting. He said that in view of the current situation and inflation, this is the right time to reduce interest rates. They believe that low interest rates will develop farming, people’s expenses will increase, houses will be invested and companies will also invest capital. This will speed up the country’s economy.