Interest Rate My View


The Reserve Bank of India (RBI) in its monetary policy meet on 02ndJune, 2015 has cut the repo rate by 25 basis points to 7.25% from 7.50%. Consequently, the reverse repo rate under the LAF stands adjusted to 6.25% and the marginal standing facility (MSF) rate was cut by 25 basis points to 8.25% as against 8.50%, while Cash Reserve Ration and Statuary Liquidity Ratio kept status quo at 4% and 21.5% respectively. The interest rate cut to spur growth and revive investment but the central bank has remained cautioned that Inflation is expected to rise to 6 per cent by January 2016 and they also cut their GDP target to 7.6% from earlier 7.8% for FY 16. A possible push back of U S interest rate hike by FED, still makes indicators of recovery and low investment and credit growth has led RBI to cut interest rates by 0.25bps. But going ahead we are expecting monsoon to remain normal, clearing of GST bill in Rajya Sabha during the monsoon session, possible clearing of Land Acquisition bill, further with the process of clearing of stuck infrastructure projects is going on and likely pick up in corporate earnings going ahead. We expect a further 25 bps rate cut or a CRR cut during the year.

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