Industry bodies have welcomed the step, but they have also have also expressed concern on the central bank's announcement that in future repo-rate reduction may not be possible.
“The RBI's decision to go in for another round of policy rate cuts was very aptly timed and was almost indispensable to revive the confidence of industry. We believe this would certainly lend some support to the flagging industrial growth. We do hope that RBI will follow this up with further rate cuts even though they have indicated that headroom for further cuts is limited,” said Naina Lal Kidwai, President, FICCI, in a statement.
Apex industry body Assocham said that the 25 basis points repo rate cut by the RBI is on the expected lines but the central bank has dampened the sentiment by stating that the headroom for further monetary policy easing remains quite limited.
“In a way, what RBI is telling us is that we must learn to live with high interest rates scenario even as the Governor Mr D Subbarao himself has expressed concern over slowdown in the economy,” said Assocham President Rajkumar Dhoot.
Industry body CII expressed hopes that the RBI would go ahead with a 50 bps reduction in the repo rate to make a significant impact on investor sentiments.
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