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`RBI may cut Bank Rate in credit policy`
New Delhi: The Reserve Bank might cut the Bank Rate in the upcoming busy season credit policy in view of the liquidity overhang in the domestic economy and lower interest rates abroad, feels Institute of Economic Growth (IEG).
New Delhi: The Reserve Bank might cut the Bank Rate in the upcoming busy season credit policy in view of the liquidity overhang in the domestic economy and lower interest rates abroad, feels Institute of Economic Growth (IEG).
“We may expect a cut in Bank Rate in the coming credit policy,” IEG said in its latest report.
Bank Rate is the interest at which the RBI extends credit to the commercial banks. The economic thinktank said the excess liquidity in the economy and lower interest rate structures prevailing abroad, would “lead to further decline in the short-term interest rates in India.”
Citing that prime lending rates were above 10%, while short-term interest rates were below 5%, the Delhi-based institution said, “This huge spread discourages both savings and investments in the economy.
RBI had recently reduced the repo rate by 0.5% to bring down the short-term rates further and “lower interest rate structure continues,” reasoning for the expectation in the Bank Rate cut. Bureau Report
Bank Rate is the interest at which the RBI extends credit to the commercial banks. The economic thinktank said the excess liquidity in the economy and lower interest rate structures prevailing abroad, would “lead to further decline in the short-term interest rates in India.”
Citing that prime lending rates were above 10%, while short-term interest rates were below 5%, the Delhi-based institution said, “This huge spread discourages both savings and investments in the economy.
RBI had recently reduced the repo rate by 0.5% to bring down the short-term rates further and “lower interest rate structure continues,” reasoning for the expectation in the Bank Rate cut. Bureau Report