Industry leaders disappointed over no change in interest rates

Mumbai (Maharashtra) [India], Dec 6: Divergent industry views emerged after the Reserve Bank of India (RBI) on Thursday kept repo rate unchanged at the current level of 5.15 per cent and lowered its GDP forecast to 5 per cent for the current financial year 2019-20.

“The decision to not lower interest rate has come as a surprise and a bit of a disappointment to the industry,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India. “It would have provided a much-required reprieve to some ailing sectors like real estate and auto. The RBI has probably taken the cautious approach of wait and watch to see the effect of past rate cuts and also to assess the inflation trajectory,” he said.

FICCI President Sandip Somany said leaving the repo rate unchanged is contrary to what the industry body was expecting, given the weakening growth scenario in the economy.
“We note with concern that the transmission of the earlier policy rate cuts has not happened adequately, and are disappointed with the decision to not cut the repo rate as there is a need for continued action on the policy rate front. A reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change,” he said.

Amar Ambani, President and Head of Research at Yes Securities, said the pause on the rates is attributed to transient inflationary risks, though the central bank affirms that there is space for policy action.

“Given the growth-inflation dynamics, we still sense that RBI will deliver a rate cut of 25 basis points in February policy meeting given the widespread deceleration in the economy. Although the RBI is concerned about near-term inflation risks, higher rabi crop output will assuage the spike in food prices,” he said.

Kumaresh Ramakrishnan, Chief Investment Officer at PGIM India Mutual Fund, said the central bank has retained the accommodative stance, signalling that the rate cut cycle is not over. The status quo on rates appears to have been influenced by a change in inflation dynamics since the October policy.

However, Joseph Thomas, Head of Research at Emkay Wealth Management, said there are three reasons why there was actually no need for the RBI to cut the rates this time.
First, the retail inflation indicated by the consumer price index has shot up to 4.62 per cent, well above the RBI target ceiling of 4 per cent. Second, the rupee is weaker today than it was three months ago. A weaker rupee is akin to lower interest rates.

Third, the liquidity in inter-bank market and systemic liquidity are in surplus and there is sufficient liquidity to see the auctions go through smoothly. “The liquidity conditions ensure that rates, especially at the short end of the curve, remains low. This is what is actually achieved by a repo rate cut too.”

The post Industry leaders disappointed over no change in interest rates appeared first on Digpu News Network.

More News From Daily Tech Geek

Climate activist: Why tout development if there's no future?

Jan 27, 2020

NEW DELHI — An Indian girl who was among the 16 young activists filing a complaint at the United Nations accusing countries of inaction on climate change has taken that step before. Ridhima Pandey, now 11, filed a petition in 2017 at India's National Green Tribunal, which oversees environmental concerns, for not taking serious enough steps to combat climate change. It was dismissed, but she escalated it to the Indian Supreme Court. Pandey was among the activists including Swedish teen Greta Thunberg who criticized Germany, France, Brazil, Argentina and Turkey for failing to uphold their obligations to young people under...

Pakistan battles dengue epidemic, with 20 deaths so far

Jan 27, 2020

ISLAMABAD — Pakistani health officials were battling an outbreak of dengue fever in the South Asian nation on Tuesday, a day after health officials confirmed over 10,000 cases and 20 deaths in recent months. More patients with symptoms of dengue fever were arriving at hospitals in all major cities, including the capital Islamabad, putting a strain on the country's poor health system. Health officials hope that the anti-mosquito spraying in urban areas targeting stagnant water will help contain the disease. According to Zafar Mirza, a government adviser on health, as many as 10,013 dengue cases had so far been reported....

Over 30 Indian worshippers drown during Hindu rituals

Jan 27, 2020

NEW DELHI — More than 30 Hindu worshippers have drowned in swollen rivers and in a lake in India as thousands participated in religious ceremonies in which figures of a Hindu god are immersed in water, officials and news reports said Friday. At least 11 people drowned when their boat capsized early Friday on a lake in central India, rescuers said. Six people were able to swim ashore in the lake in Bhopal, the capital of Madhya Pradesh state, and a search was on for one missing person, said National Disaster Response Force spokesman Krishan Kumar. Kumar said 11 bodies...

India loses communication with its unmanned moon lander

Jan 27, 2020

NEW DELHI — India's space agency said it lost touch Saturday with its Vikram lunar lander as it aimed to land on the south pole of the moon and deploy a rover to search for signs of water. The space agency was analyzing data as it worked to determine what had happened. "Communications from lander to ground station was lost," said K Sivan, chairman of the Indian Space Research Organisation. "The data is being analysed." A successful landing would have made India just the fourth country to land a vessel on the lunar surface, and only the third nation to...

Protest in Nepal against plan to cut trees to widen road

Jan 27, 2020

KATHMANDU, Nepal — More than 200 people rallied in Nepal's capital Thursday to protest government plans to cut down about 2,000 trees to widen a key road that circles the city. The protesters held signs urging the government to stop the plan to remove the trees on the outer edge of Kathmandu. The 27-kilometer (17-mile) Ring Road encircles the capital and is a key road network for the increasingly congested city. "These trees were controlling pollution and giving fresh air so they cannot be cut down to make roads," said Saurav Dhakal, a protester. "Kathmandu is suffering from massive air...

About Us

Daily Tech Geek delivers Technology news only covering the multiple fields in the industry.

Contact us: sales[at]

Subscribe Now!