In his first rate decision, new RBI chief Urijit Patel cut the repo rate from 6.50 per cent to 6.25 per cent. This 0.25 per cent cut takes the rate to a six-year low.
Technically, this is going to help bring the rates of home loan, car loan and corporate loan down as banks will now lend money at a lower rate.
And if this rate keeps falling then the total benefit to the borrower will be huge.
“The committee expects that the strong improvement in sowing, along with supply management measures, will improve the food inflation outlook. The government has announced several measures to cool food inflation pressures, especially with regard to pulses,” the RBI said in a statement.
The former RBI governor Raghuram Rajan was often accused by markets of not going for rate cuts and thereby hampering growth.