Not by cuts alone | The Indian Express

Not by cuts alone | The Indian Express

Written by Saugata Bhattacharya |Updated: August 8, 2019 3:56:09 am

The writer is senior vice president, business and economic research, Axis Bank. Views are personal

Not by cuts alone

Repo rate cut will help lower borrowing costs, but growth revival will require a coordinated policy response.

The RBI cut its FY20 India growth forecast from the earlier 7 per cent to 6.9 per cent with slight “downside risks”.

The Monetary Policy Committee (MPC) surprised us by cutting the policy repo rate by a higher than expected 0.35 percentage points, taking the policy repo rate down to 5.40 per cent, the fourth cut since February. The decision to cut the repo rate was unanimous, but two of the six MPC members voted to cut the rate by a lower 0.25 percentage points. The accommodative stance was retained.