How does the Reserve Bank of India influence the economy through interest rates
Discuss the role of RBI in cutting interest rates and its impact on the economy, as suggested by Piyush Goyal.
- The Reserve Bank of India (RBI) influences the economy through interest rates by adjusting the repo rate, which is the rate at which it lends money to commercial banks.
- When the RBI cuts interest rates, it aims to promote borrowing and spending by making loans cheaper, which can stimulate economic growth and investment.
- Piyush Goyal, former Finance Minister of India, has suggested that lowering interest rates can boost consumer demand, drive investment, and spur job creation in the economy.
- However, cutting interest rates can also lead to inflation if demand outstrips supply, so the RBI must carefully monitor economic indicators to strike the right balance.
- Overall, the RBI's efforts to cut interest rates play a crucial role in shaping the country's economic growth trajectory.
Answered
5 months ago