Opinion | RBI plays its part, over to banks to improve liquidity
The MPC has appropriately acknowledged the issues that are surrounding the economy
Along expected lines, the RBI cut the repo rate by 35 basis points instead of the conventional practice of 25 bps or 50 bps. First and foremost, it is a new normal from the Monetary Policy Committee (MPC), clearly indicating the downward bias toward interest rates. Since last November, the RBI has recognized the need to proactively cut interest rates and provide more liquidity and bring stability to the financial markets, as well as bring down the interest cost for borrowers. Its effort has definitely led to a significant drop in interest rates for government securities. It has also brought stability in the overall liquidity in the market, reflected in the overnight rates and RBI repo window.