Despite the rate of 25 basis points by RBI, the one -year deposit certificate rate remains at 7.8 percent.
If the Reserve Bank of India (RBI) intends to promote growth, then it should focus on making liquidity easier instead of cutting rates. Neelkanth Mishra, the chief economist of Axis Bank, said this on Tuesday. According to the news of PTI, he said that the increase in rates would not promote increase. Mishra, a part -time member of the Prime Minister’s Economic Advisory Council, said that the rates declared earlier this month or the rate cut in the subsequent rates will not increase borrowing, as lack of liquidity would hinder profit transfer.
Give this advice and the reason for the reason
During an event at Axis Bank Headquarters, the economist said that if the objective is to make financial conditions easier and support the growth, as the MPC has said … then I suggest that the first liquidity be noted, because this level should be given But there is no help from cuts cuts. If objective is to use monetary means to support growth, then liquidity should be the first solution. If the purpose of cutting interest rates is to be borrowed more, new loans will not be given at low rates, as the marginal cost of money remains high due to the crisis of liquidity for the last 18 months.
Rate cuts will reach 75 basis points
Mishra said that despite the rate of 25 basis points by RBI, the one -year deposit certificate rate remains at 7.8 percent. It is worth noting that after the announcement of interest rate cuts, the RBI said that about 40 percent of the loan will change immediately, as they are connected to the external benchmark, while the other will take up to two quarters. He admitted that analysts hoped that the total reduction from the three cuttings as part of the current cycle would reach 75 basis points, but they reiterated that it would be more effective to pay attention to liquidity.
Clear cuts in CRR will be more effective
When asked which liquidity measures he would currently recommend, Mishra voted in favor of regular open market operations by the Reserve Bank to provide sustainable liquidity, and said that in another cash reserve ratio (CRR) Instead of deduction, incremental cuts in CRR will be more effective. If the liquidity becomes normal enough, and the government is maintained on its fiscal party commitments, then GDP growth from Q2Fy26 seems to reach 7 percent level.
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