Industry welcomes rate cut by RBI, expects bigger cut in near term

New Delhi [India], February 7 (ANI): The Confederation of Indian Industry (CII) has strongly welcomed the Reserve Bank of India's (RBI) decision to lower the repo rate by 25 basis points to 6.25 per cent per cent marking the first rate cut in nearly five years.
Chandrajit Banerjee, Director General, CII, said, "The recent series of liquidity easing measures introduced over the past two weeks will aid in the effective transmission of the rate cut to the productive sectors of the economy. Additionally, the RBI's indication that it will inject liquidity as needed to address any tightening of frictional and durable liquidity in the system will ensure that monetary policy transmission remains effective."
He added, "We believe that the easing inflation trend and non-inflationary fiscal policy have provided the RBI with the opportunity to continue its rate cut cycle and implement a larger rate cut once financial conditions become favourable."
The Federation of Indian Chambers of Commerce & Industry (FICCI) also lauded the RBI's monetary policy move.
FICCI President Harsha Vardhan Agarwal stated, "RBI's decision to ease the policy rate is a timely and forward-looking step and we hope that the banking sector would follow through on this cue and a lowering of lending rates will be seen. Further, while RBI has maintained a neutral stance with regard to Monetary Policy, the indication towards a more flexible interpretation of inflation targeting sets the stage for further rate cuts over the near term."
He added, "The Union Budget 2025-26 announced last week has laid a strong foundation for investment-led growth with an emphasis on manufacturing, MSMEs and infrastructure. Today's rate cut complements these measures, lending further support to India's growth outlook."
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, noted the positive impact of the rate cut on the housing sector.
"This much-awaited move by the RBI is poised to significantly boost the housing segment by stimulating demand, particularly among first-time homebuyers. It also offers an opportunity for developers to launch new projects, as this decision will also bring relief from cost pressures on construction costs.," he said.
CS Vigneshwar, President of the Federation of Automobile Dealers Associations (FADA), emphasized the boost to the auto sector.
He said, "This cut dovetails seamlessly with the Finance Minister's recent announcement of zero tax up to Rs12.75 lakh, thereby enhancing consumers' disposable income. When combined, these measures could reinvigorate segments that have been lagging, helping them catch up with the broader market."
"With auto loans set to become more affordable, we expect stronger demand in the price-sensitive two-wheeler and entry-level car segments, which have faced the brunt of steep price hikes and affordability concerns. We anticipate this rate cut will lend much-needed momentum to India's Auto Retail sector in the coming months." (ANI)