The Indian Merchants’ Chamber has given a thumbs up to ``the surprise, but much needed, cut in repo rate from 7.75 per cent to 7.50 per cent.''
Prabodh Thakker, President of the Indian Merchants' Chamber (IMC), noted that the cut, the second in two months, ``signals the pragmatic approach of the Reserve Bank of India, which has realised that the still weak indicators of production and credit offtake needed pre-emptive policy action, to utilise the available space for monetary accommodation''.
The cut comes just days after the Government and the RBI agreed to formally adopt inflation targeting. Thakker, who is also the Founder and Chairman of Aon Global Insurance Brokers, said in a statement that it also reflects that the RBI rate cut, ``is an approval of the Government’s 2015-16 pledge to contain the fiscal deficit at 4.1 per cent and further to 3 per cent progressively''.
IMC hoped that the banks would pass on the benefit of the rate cut to consumers and that the cut would spur a growth and development cycle in the industrial sector, and that a further reduction in rates would be seen soon.