The Reserve Bank of India on Thursday cut repo rates by 25 basis points due to a continued fall in inflationary pressures.
Here's what business leaders and policy makers had to say.
Arun Jaitley, finance minister
The rate cut is positive for the Indian economy. It will leave more money in the hands of people for greater spending and help in reviving investment cycle.
Jayant Sinha, minister of state for finance
The rate cut is a signal of the positive momentum being witnessed on the ground. We are now at a point where the economic indicators point at hope in the future. The rate cut is a lagging indicator of the turnaround in the economy. After trying to take a grip on key factors, we are now in a phase of accelerating our growth plans.
Soumya Kanti Ghosh, SBI chief economic advisor
This is a positive move by the RBI and is reflective of the impact of the benign environment in commodities and crude. It could be the beginning of a softer interest rate cycle.
Saugata Bhattacharya, Axis Bank chief economist
It is a strong and positive statement from the RBI and would not have been made if the RBI governor didn’t have conviction in the easing of the inflationary pressures. Now there could be a series of cuts based on the reaction of the markets, banks and the currency. But RBI’s move will be frontloaded, the rate cuts would be done quickly. The next rate cut could likely be in February and our estimate is that it could be again in the region of 25 basis points. The rate cuts have already strengthened the rupee. The currency has already appreciated and may reach 61.
Shubhada Rao, Yes Bank chief economist
It is a strong and positive statement from the RBI and would not have been made if the RBI governor didn’t have conviction in the easing of the inflationary pressures. Now there could be a series of cuts based on the reaction of the markets, banks and the currency. But RBI’s move will be frontloaded, the rate cuts would be done quickly. The next rate cut could likely be in February and our estimate is that it could be again in the region of 25 basis points. The rate cuts have already strengthened the rupee. The currency has already appreciated and may reach 61.
Shubhada Rao, Yes Bank chief economist
It is a timely move by RBI and is in keeping with the way inflationary pressures have eased. The next rate cut would be contingent on the fiscal consolidation. We expect the next rate cut to be in the first quarter of FY2016, between April and June and will be of 50 basis points
Lakshmi Iyer, Kotak Mutual Fund chief investment officer (Debt)
The rate cut comes in the wake of a visibly lower CPI and the confidence in being able to achieve targets. We believe that the current rate cut heralds a shift in monetary stance and creates a case for continued rate cuts in future. Fiscal developments would continue to play a key role in the quantum and timing of future rate cuts too.