Stock Market Stays Unhappy with 25 basis Repo Rate Cut by RBI
Bombay Stock Exchange Image credit X.com
New RBI Governor Sanjay Agarwal gives 1st Rate Cut in 2-yr
By S Jha
New Delhi, February 7: The stock market was unimpressed with first rate cut in two years of just 25 basis points by the six-member monthly policy committee (MPC) of the Reserve Bank of India (RBI). The repo rate was reduced to 6.25 from 6.50 by the RBI.
The Central Bank is facing flaks for not cutting rates even while most of the economies in the world reduced rates after the inflation cooled down. The US Federal Bank cut rates multiple times last year.
The newly appointed RBI Governor Sanjay Agarwal saw the MPC agreeing for the first rate cut in two years., His predecessor Shaktikant Das had rejected suggestions for rate cuts.
Trump Trade War Sinks Stock Market While Bears Maul Oil Scrips
But the RBI was miser with just 25 basis points cut, which came as too late and too little. The US Federal Reserve in its first rate cut had shaved off 50 basis points from the principal lending instrument.
Repo rate is the rate of interest at which the RBI lends to the banks. This is also a benchmark at which the home loans and personal loans are linked. Experts claimed that the banks may resist passing on the benefits to the existing home loanees.
Nifty was trading with a cut of 73 points within half hour of the first rate cut by the RBI in two years. The Bank Nifty plunged by over 270 points, showing a clear disappointment with too small rate cut.
The stock market is also making sense of the RBI commentary. The inflation target for the current year remains unchanged with moderation expected in the next fiscal to 4.2 per cent.
The RBI is also battling rupee in an almost freefall after breaching the level of ₹87 yesterday. The flight of the capital and the global upheavals after the unveiling of Donald Trump presidency remain key challenges for the RBI, said experts.
Join the WhatsApp Channel of The Raisina Hills
Follow on Google News https://news.google.com/publications/CAAqBwgKMNK2vwsw39HWAw?hl=en-IN&gl=IN&ceid=IN%3Aen
About The Author
