RBI Cuts Rates, Warns on Further Easing 

BACKFOOT PLAY Governor lowers signal rate by 0.25 pct points, but says inflation still a concern; bankers say EMIS may not come down soon

The Reserve Bank of India (RBI) on Tuesday lowered its benchmark policy rate by 0.25 percentage points for the second time in the year to help revive economic growth, but cautioned that the scope for further easing is limited as inflation remained a worry.

It may mean nothing for your EMIs. Bankers said they would wait for the current fiscal year to end before passing on the benefit to home, auto and corporate borrowers, EMIs (equated monthly installments) are unlikely to come down anytime soon.

The central bank slashed the repo rate, the rate at which it lends to banks, to 7.50% in its mid-quarter policy review but added a big if on whether the trend would continue.

“Even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited,” said D Subbarao, governor, RBI. He hinted that more action was needed from the government to make things better.

“Key to reinvigorating growth is accelerating investment,” said the governor. “The government has a critical role to play by remaining committed to fiscal consolidation, easing supply bottlenecks and improving project implementation.”

Hindustan Times, New Delhi, 20-03-2013