RBI repo cut by 50 bps strong, timely policy shift: Experts

Kolkata, Jun 6 (PTI) Experts on Friday welcomed the decision of the Reserve Bank of India (RBI) to reduce the repo rate by 50 basis points to 5.50 per cent and cash reserve ratio (CRR) by 100 basis points in four tranches.

Managing Director and CEO of Indian Overseas Bank Ajay Kumar Srivastava said in a statement that the move indicates a strong and timely policy shift that aligns with balancing growth with price stability.

Besides this, the revision in CPI inflation to 3.7 per cent for 2025-26 also shows the central bank's confidence in inflation being aligned with the four per cent target, he said.

According to Srivastava, the decision in the CRR cut is expected to release Rs 2.5 lakh crore liquidity in the system, which will ease credit conditions in the banking sector.

Siddhartha Sanyal, chief economist of Bandhan Bank, said, "The central bank sprang several surprises. The rate cut by 50 basis points came as a surprise as our expectations were 25 basis points. The larger than expected rate cut brings in more focus on the transmission of the monetary policy actions into the real economy." Sakshi Gupta, principal economist of HDFC Bank, said that the RBI delivered a surprise monetary bonanza.

"This reflects the central bank's endeavour to spur aggregate demand in the face of global headwinds," Gupta said.

"The RBI kept its growth forecast unchanged at 6.5 per cent while reducing inflation estimate to 3.7 per cent for the current financial year," the economist said.

Chief investment officer of Axis Securities PMS, Naveen Kulkarni, said that the RBI's decision to cut rates by 50 basis points was a surprise.

"The decision of the central bank to cut rates by 50 basis points came as a surprise against our expectations. Softening inflation trends, expected to remain below the tolerance limit, will lead to demand recovery," Kulkarni said. PTI dc SBN SBN

Source: PTI