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The interest rate question

Even if the RBI cuts rates, it is important to manage expectations about its effects

Ashok K Lahiri 

Ashok K Lahiri With inflation at fairly low levels, businesses find interest rates too high.  So do a third of the home loan borrowers in surveys. Given the increasingly vociferous demands for the Reserve Bank of India (RBI) to reduce rates of interest, the suspense surrounding the outcome of the fourth bi-monthly meeting of its Monetary Policy Committee (MPC) ending on Wednesday is palpable. The real rate of interest is the nominal rate of interest adjusted for inflation. It indicates the real return to a lender after accounting for the change in the value of money. Given the diversity of ...

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First Published: Tue, October 03 2017. 22:43 IST
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