While welcoming the cut the repo rate by 25 basis points to 6 per cent, Dr. A. Sakthivel, FIEO Regional Chairman, said that it will trigger hope of lower borrowing costs for Industry and provide positive momentum in the present gloomy economic scenario. “Entire business community expected it, as the inflation is coming down”, Dr. Sakthivel said.
He urged the RBI Governor to take necessary steps to see all banks cut its lending rates immediately as there is scope for the banks to reduce interest rate further beyond RBI rate cut.
“We expected a reduction of 50 basis points in key lending rate this time, as inflation has cooled to record low level of 1.54 per cent in June. Inflation in the previous month – May this year – was 2.18 per cent, June last year it was 5.77 per cent”, he said.
The economic growth unexpectedly slowed to its lowest in more than two years, manufacturing sector contracted in July following the GST, exporters are facing serious working capital crunch and hence adequate availability of cheaper fund especially for MSME sector is need of the hour to make our products competitive in the international market, Dr. Sakthivel added.