The RBI will announce the decision of the Monetary Policy Committee today (December 07, 2016) at 2:30 p.m.
The reason being mentioned is that the central bank will have to cut rate to boost growth as the government’s demonetization move is slowing down consumption and economy in The India.
“Given the concerns about demonetization and the slowdown it is likely to generate in sectors that have traditionally been cash dependent, such as consumption goods, the RBI will try to cushion the blow with a rate cut,” Shilan Shah of Capital Economics in Singapore has been quoted as saying in a Reuters report.
A rate cut seems to be the only pill that the central bank can administer at present to improvement The Indian economic growth and consumer confidence.
The government on 8 November announced its decision to demonetize Rs 500 and Rs 1,000 notes and replace them with new ones in a bid to control black money generation, fake currency usage and terror cash. The unexpected move resulted in a cash crunch as the RBI was not prepared to meet the demand for new notes. The demonetized notes formed 86 percent of the currency in circulation by value.
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