2025-02-07 02:36:30 pm | Source: SMC Global Securities Ltd
This move will be positive for the borrowers who have taken loans at floating interest rates as the banks will pass on the benefit of the rate cut to the borrowers. Also, auto loans, home loans, and personal loans are expected to see higher demand. The rate-sensitive sectors such as banking, consumer durables, real estate, and automobiles will benefit from this announcement as it can boost borrowing, spending, and investment. This can result in higher corporate earnings, and business expansion, foster job creation, and promote holistic economic growth.
PMI Manufacturing Future Output Index rose to 65.1 in January 2025 from 62.5 in December 2024 signifying a robust manufacturing sector. India’s CAD (Current Account Deficit) fell slightly to 1.2% of the GDP in Q2 of FY25 from 1.3% in Q2 of FY24 which might reduce the pressure on the rupee. Also, India’s forex reserves stand at $630.6 billion (as on January 31, 2025), providing great support to India’s external sector amidst global uncertainties.
Quote on RBI monetary policy announces 25 bps rate cut by Ajay Garg, CEO, SMC Global Securities Ltd
Below the Quote on RBI monetary policy announces 25 bps rate cut by Ajay Garg, CEO, SMC Global Securities Ltd
RBI has announced the repo rate cut of 25 bps to 6.25% from 6.50%. This cut was considered after India’s real GDP growth rate fell to 6.4% in FY25 from 8.2% in FY24 and it is expected to rise to 6.7% in FY26. After the favorable outlook on food prices and normal monsoon, the CPI inflation for FY25 is projected at 4.8% and it can further fall to 4.2% in FY26. RBI has maintained a neutral stance to keep a flexible approach to maintain a balance between inflation targets and economic growth.
This move will be positive for the borrowers who have taken loans at floating interest rates as the banks will pass on the benefit of the rate cut to the borrowers. Also, auto loans, home loans, and personal loans are expected to see higher demand. The rate-sensitive sectors such as banking, consumer durables, real estate, and automobiles will benefit from this announcement as it can boost borrowing, spending, and investment. This can result in higher corporate earnings, and business expansion, foster job creation, and promote holistic economic growth.
PMI Manufacturing Future Output Index rose to 65.1 in January 2025 from 62.5 in December 2024 signifying a robust manufacturing sector. India’s CAD (Current Account Deficit) fell slightly to 1.2% of the GDP in Q2 of FY25 from 1.3% in Q2 of FY24 which might reduce the pressure on the rupee. Also, India’s forex reserves stand at $630.6 billion (as on January 31, 2025), providing great support to India’s external sector amidst global uncertainties.
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