Front-loaded 50-bps cut likely to help achieve twin objectives of supporting demand and growth: RBI minutes
A front-loaded 50-bps cut in the policy rate is likely to help achieve the twin objectives of supporting demand and growth by reducing the cost of funds for borrowers, MPC meeting minutes released on Friday stated. It would result in a significant reduction in the EMI/NMI ratio or the debt service period for EBR-linked loans, including home and MSME loans, generating a substantial income effect for middle-income groups and the MSME sector. Furthermore, the 50-basis-point rate cut should not cause any overheating in the economy, as there are no indications of demand-pull inflation, MPC member Prof. Ram Singh said. The core CPI excluding petrol, diesel, gold and silver remains low at 3.5% yoy in April 2025. This inflation series has hovered in the 3.2-3.5% range for the last eight months. Even at the subgroup level, the core CPI inflation remains muted for most subgroups. According to the World Bank forecast and the S&P commodities index, global commodity prices are expected to remain stable, except for gold.
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Front-loaded 50-bps cut likely to help achieve twin objectives of supporting demand and growth: RBI minutes
A front-loaded 50-bps cut in the policy rate is likely to help achieve the twin objectives of supporting demand and growth by reducing the cost of funds for borrowers, MPC meeting minutes released on Friday stated. It would result in a significant reduction in the EMI/NMI ratio or the debt service period for EBR-linked loans, including home and MSME loans, generating a substantial income effect for middle-income groups and the MSME sector. Furthermore, the 50-basis-point rate cut should not cause any overheating in the economy, as there are no indications of demand-pull inflation, MPC member Prof. Ram Singh said. The core CPI excluding petrol, diesel, gold and silver remains low at 3.5% yoy in April 2025. This inflation series has hovered in the 3.2-3.5% range for the last eight months. Even at the subgroup level, the core CPI inflation remains muted for most subgroups. According to the World Bank forecast and the S&P commodities index, global commodity prices are expected to remain stable, except for gold.
