What is the significance of the recent MPC decision to cut the repo rate by 25 basis points in India?
Understanding the impact of monetary policy changes on the economy.
- Lowering the repo rate encourages borrowing and spending, thereby stimulating economic activity.
- Reduced borrowing costs for businesses and consumers can lead to increased investments and consumption, boosting overall economic growth.
- Lower interest rates can make loans more affordable, supporting sectors like real estate and auto industries.
- It can help in controlling inflation by making borrowing more attractive than saving, which may lead to increased spending and lower saving rates.
- The decision reflects the Reserve Bank of India's assessment of the current economic situation and its efforts to support the economy amidst challenges like the COVID-19 pandemic.
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2 months ago