Market experts hail 25 bps rate cut by RBI, expect repo rate at 5.5% by year-end with enough liquidity

Shriram Ramanathan, CIO, Fixed Income, HSBC Mutual Fund, said, "The RBI MPC managed to meet the market's hefty expectations, by announcing a 25bps repo rate cut along with a change of stance to accommodative. Importantly, the MPC now believes that the headline CPI is aligned on a durable basis to the 4% target, thereby allowing them to focus unequivocally on growth."

He added, "The RBI Governor has clearly indicated the softening path of policy rates going forward as well, which we expect to move at least towards 5.5% over the course of CY2025, along with continuation of liquidity infusion measures - all of which bode well for the continued downward trajectory of interest rates"

Commending RBI's decision Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund said that a shift to accommodative stance, notwithstanding the earlier reference to global uncertainties has been the key takeaway.

He further added, "Effectively the key message is the unambiguous focus on domestic growth and the confidence that forward looking inflation is likely to be aligned closer to the policy target of 4%. Alongside the demonstrated commitment to address liquidity dynamics, the policy stance clearly opens up the likelihood of additional rate cuts in this cycle".

Mayur Modi, Co-founder, Co-CEO & COO Moneyboxx Finance Limited, emphasised that for NBFCs, the reduced cost of funds enables more affordable credit offerings to micro and small enterprises. Measures like the expanded co-lending framework and securitisation of stressed assets further strengthen the lending ecosystem, by increasing liquidity and risk-sharing.

"At a time when unsecured loan NPAs have been a concern for the industry, a calibrated policy that distinguishes between consumption-driven and enterprise-led borrowing is essential. These steps support credit quality while ensuring critical segments are not left behind," he added. (ANI)