RBI repo rate reduction to 5.15% in line with market expectations, says Rao

New Delhi: The reduction of the Repo rate by 25 bps to 5.15 per cent by RBI is widely in line with market expectations, said Punjab National Bank MD and CEO Mallikarjuna Rao .

Further, RBI has continued with an accommodative stance, suggesting possibility of further rate cuts, if required. This rate cut will perfectly complement the fiscal measures announced by the government to help strengthen private consumption and spur investment activity going forward.

Overall liquidity has remained surplus in August and September 2019. In the backdrop of current macroeconomic setting of lower growth and range bound inflation, there may be a case for surplus liquidity to not only uplift the sentiment but also for effective rate transmission. The expected GDP growth rate has been justifiably revised downward to 6.1 per cent for 2019-20, given the hitherto weak domestic demand conditions.

However going ahead, the easing of rates combined with the fiscal measures announced by the Government recently are expected to revive demand, thereby giving a fillip to the economic growth.