Impact of rate cut limited

THE MPC DELIVERED A LARGER-THAN-EXPECTED 50-BP RATE CUT IN JUNE TO BOLSTER ECONOMIC GROWTH AS INFLATION REMAINED BELOW TARGET

- REUTERS

The immediate incremental impact of an additional 25 basis-point rate cut delivered earlier this month by the Reserve Bank of India's (RBI) monetary policy committee may be relatively limited, external member Saugata Bhattacharya told Monday.

The MPC delivered a larg-er-than-expected 50-bp rate cut in June to bolster economic growth as inflation remained below target.

"Interest rates transmission also works through a transfer of disposable incomes across various economic stakeholders," Bhattacharya, the only member to vote for a 25-bp rate cut said while sharing his personal views.

He said the most crucial shift will be to micro, small and medium enterprises (MSME) and home loan borrowers from retail depositors.