Repo rate may be lowered in view of hope of good monsoon
Mumbai: The weatherman's prediction that there will be a normal monsoon in the country this year has cheered farmers as well as commercial banks for different reasons.
The farmers, especially those who faced drought last year, are happy because they hope to reap a rich harvest and pay off some of the loans taken to meet the financial crisis created by the natural calamity.
For bankers it is a different story. Most of the economists believe that the Reserve Bank may cut the Repo rate in the light of this report in June when the next monetary policy review will be made.
In addition to good monsoon the other guiding factor may be the current price trend. Retail prices have not shown any marked increase. The average rise is around four per cent .
There may be further fall in prices of some of the commodities in the wake of widespread and adequate rainfall.
The monetary policy committee may be also guided by the fact that the economic growth this year is likely to be more than seven per cent.
In view of all this, it is hoped that the Repo rate may be lowered by zero point two five per cent.
The rate was not changed this month as the committee unanimously decided against it at the review meeting in the first week of this month. It, however, was in favour of increase in the reverse Repo rate which now stands at six per cent.
Fall in Repo rate may lead to lowering of interest rates for loans to be taken for home and other needs.