banking and finance

RBI cuts repo rates by 25 basis points, as expected by many

The Monetary Policy Committee voted 4-2 in favour of the move, keeping lower inflation and the need for a pickup in bank credit in mind.

The Reserve Bank of India on Wednesday decided to cut its benchmark policy rates by 25 basis points to 6% from 6.25%, as expected by a majority of economists.

The six-member Monetary Policy Committee voted 4-2 in favour of the rate cut, which now leaves the reverse repo at 5.75% instead of 6%. While one member had proposed a larger 50 basis points cut, another voted in favour of status quo.

The MPC believes that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for people’s housing needs.

The RBI rates

One basis point is one-hundredth of a percentage point. The repo rate is the rate at which the RBI provides funds to banks. A cut in the rate implies cheaper credit for banks, which, in turn, are expected to lower the cost of loans for their customers.

The committee has a mandate to keep inflation below 4% with a 2% room on either side of the target to manage growth and other policy expectations. However, consumer price inflation, which is now the benchmark for the central bank to measure prices, has been falling steadily – it dropped from 3.81% in March this year to 1.54% in June.

The RBI had last cut rates in October 2016, when it brought the repo rate down to 6.25% from 6.5%. In February, however, it had surprised many by moving its stance on monetary policy from “accomodative” to “neutral” without changing the rates.

An accomodative stance implies that the central bank sees legroom to cut interest rates, whereas a neutral stance implies that there is lesser clarity on how the economic conditions will shape up and that a decision on rates will be made depending on data received.

Moreover, the RBI has a dual mandate to keep inflation in check while enabling growth in the economy. While inflation indicators seem to show positive signs, growth is nowhere near the levels expected as bank credit slipped to a 60-year historic low earlier this year, displaying a continued slowdown in the industry.

This becomes important as private investment has yet to pick up in light of excess capacity with companies. Capacity utilisation is still hovering around 75%, according to RBI data, and investments, and subsequently credit, tend to pick up when it breaches the 80% mark.

Meanwhile, demonetisation did result in some slowdown in the Indian economy. The GDP growth for 2016-17 was 7.1%, as the last quarter of the financial year saw a growth of only 6.1% compared to 7% in the previous quarter. The economy had grown at 8% in 2015-16, according to the government’s revised estimates.

We welcome your comments at
Sponsored Content BY 

A phone so stunning that it deserves its own photoshoot

Presenting the Moto X4, crafted to perfection.

Precision-crafted glass and metal design, an anodised aluminium frame, easy to hold and featuring beautiful contours, the Moto X4 is crafted to perfection indeed.

With the distinctive placement of the rear cameras, this phone makes a great subject for a photographic series.

Gaurav Sawn Photography
Gaurav Sawn Photography

The light reveals the fluidity of its body; curves that fit perfectly in the contours of a palm.

Gaurav Sawn Photography
Gaurav Sawn Photography

Reclining on a bed of satin, the glass-encased phone blends into the folds of the luxurious fabric.

The slimness, seamlessness and solidity of the phone make for a great profile shot.

A stunning design which is IP68 rated water-resistant too, it is as beautiful as it is strong.

We partnered with photographer Gaurav Sawn to create this series. Says Gaurav, “The glass sandwich design looks extremely good and the reflections on the back panel make the phone stand out. This is a phone that is best used without a case. The curved corners were also very comfortable to hold. All in all, really enjoyed shooting this phone!”

While this phone is elegant and crafted to perfection, it is also extremely tough, being protected from scratches with Corning® Gorilla® Glass that stretches all the way around.

You don’t need to sacrifice of performance either. It’s packed with a 2.2 GHz octa-core Qualcomm® Snapdragon™ 630 processor and comes with a TurboPower™ Charger which means hours of power in minutes!

For the music lover, this phone is a boon. With simultaneous connectivity of up to four Bluetooth® audio devices at the same time, you can build your own stereo system without worrying about cables.

The dual rear cameras – a 12MP that lets you focus faster and get great results even on dark, cloudy days, and an 8 MP camera, with wide angle lens makes your most ambitious photos look all the more impressive.

To get your hands on the Moto X4, and experience perfection, click here.

This article was produced by the Scroll marketing team on behalf of Motorola and not by the Scroll editorial team.