Monday, October 20, 2008

RBI cuts repo rate by 100 bps

RBI has cut the repo rate by 100 bps to 8%. This is effective immediately. The Finance Minister, P Chidambaram said that the repo rate cut will help in moderating inflation. This is a positive move which will enthuse both borrowers and investors, the FM added. The RBI’s move is consistent with the government's aim of maintaining high growth, he added.

This news may come as a boon for the realty companies as it may help bring down loan rates. This is the first repo cut since 2003.

We feel that a lot of liquidity is already infused in the past 10 days. The move may not have an immediate impact on stock prices. Confidence will not come just because of a CRR cut or a repo rate cut. But once global markets recover, this will give a further boost to stock markets.

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