India central bank surprises with a rate cut, changes stance to neutral

India’s central bank on Thursday unexpectedly lowered interest rates and, as anticipated, shifted its stance to “neutral” from “calibrated tightening” to boost a slowing economy after a sharp fall in the inflation rate.

“And here, we are not only raising interest rates unidirectional (despite dim CPI outlook and currency value being very closed to it REER) thereby raising cost of debt in the economy with govt feeling the major brunt of it, but also hell-bent on getting into the IMF program despite having an adequate bridge funding that has gained us good time to do policy patchwork and draft an effective long term strategy”.

“As a country we are pushed to go for the IMF program no matter what, but why not with a merit-driven negotiations, which would be in no one’s but country’s interest?”

“Because accepting to increase interest rates to 15% with other senseless conditions, is the easiest thing to do to get the program. But getting a competitive one through hard negotiations that the MoF is currently doing is the one we should look for and support”.

“Lets hope we are able to pull the best deal for the country and its people”.[the_ad id=”32940″]

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