Press Release

RBI rate cut to help several sectors of the economy: ASSOCHAM

RBI rate cut to help several sectors of the economy: ASSOCHAM

ASSOCHAM welcomed the reduction in the policy interest rates by the Reserve Bank of India, describing the reversal of the rate cycle as a catalyst for boosting demand across different sectors of the economy.

“The 25 basis points cut in Repo rate, as recommended by the RBI Monetary Policy Committee, would help push demand in several key sectors of the economy, including housing, automobile and consumer durables amongst others”, ASSOCHAM President Sanjay Nayar said.

Any drop in cost of borrowing gives a positive push not only to the demand side of the economy but also helps corporate balance sheets, encouraging investment as the pickup in capacity utilisation is evident, as per RBI's assessment.

Sharing RBI's optimism about inflation further moderating in the fiscal 2025-26 and aligning towards the target of four per cent, Mr Nayar said, “if inflation rate retains its downward trend, we could expect further rate cuts by the RBI in the next few quarters”.

He said while ''we need to be watchful about the evolving global geo-political tensions and protectionist trade policies amongst major economies of the world, Indian policy prescription be it fiscal or monetary, is responding in an appropriate manner''.

The ASSOCHAM said it is confident that the RBI, with the support of the government, would continue to ensure stability in the foreign exchange market as well in the face of pressure from rising dollar on the emerging markets.

“Assurance from the RBI Governor Mr Sanjay Malhotra about maintaining adequate stability in the banking system and his nudge to the banks to improve lending rather than parking funds with the RBI should yield results in the form of better credit access for the businesses , especially in the MSME sector''.