Mumbai/Nagpur: Reserve Bank Governor Raghuram Rajan on Tuesday cut the benchmark repo rate by 25 basis points as expected. Dr Rajan’s first rate cut in over six months sent the repo rate to over five-year low of 6.50 per cent.
The reduction in repo rate – which is the rate at which Reserve Bank lends short-term funds to lenders – is likely to result in lower loan EMIs, bankers say. The government has been pitching for lower rates in a bid to boost demand in the economy.
However, stock markets were unmoved as a 25 basis point rate cut was factored in, traders say. Hopes of a rate cut had gained ground since the presentation of the Union Budget on February 28, in which the government kept its end of bargain on fiscal deficit.