Mumbai, Dec 5 (LatestNewsX) – The RBI announced a 25‑basis‑point cut to the repo rate on Friday, a decision that met with widespread approval from economists who see the move as a chance to boost growth while inflation remains unusually low.
Analysts said the rate hike, coupled with fresh liquidity measures, demonstrates the central bank’s intent to use the current inflation lull to keep the economy on an upward trajectory.
Rajani Sinha, chief economist at CareEdge Ratings, noted that the rate cut and the RBI’s neutral policy stance were exactly what market participants had been anticipating. “The RBI has used the very low‑inflation window to give the economy a push,” she added. “The liquidity‑boosting steps will help smoothen the transmission of the rate cuts that have already been announced.”
Crisil’s chief economist, Dharmakirti Joshi, agreed that the Monetary Policy Committee’s decision aligned with expectations, pointing out that the economy has surprised on both growth and price fronts this year, granting the RBI room to ease rates. He explained that retail inflation has fallen sharply, largely due to cheaper food, and that core inflation is cooling. “The cut will support next fiscal year’s growth, given that monetary policy takes time to work,” Joshi said.
Madhavi Arora, chief economist at Emkay Global Financial Services, highlighted that the persistent shortfall in inflation forced the RBI to act sooner rather than later. She also noted that the bank’s upgraded growth outlook signals confidence in the economy’s resilience. “The liquidity infusion of roughly ₹1.45 lakh crore through open‑market operations and forex swaps will enhance the impact of the rate cut,” she said. Arora added that a weaker rupee should not be viewed as an obstacle to further easing but rather as a natural stabiliser within the economic cycle.
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