The Reserve Bank of India should instead consider cutting the cash reserve ratio, a move it last resorted to six years ago
The former governor currently heads a central bank-appointed panel, which is studying how much of the RBI's surplus capital can be transferred to the government
Shaktikanta Das, the new RBI governor, has been trying to nudge bankers to lower lending rates, holding meetings with bank chiefs last month to discuss the monetary policy transmission
For one thing, central banks are poor forecasters
Consumer-price growth reached 2.05 per cent in January, well below the Reserve Bank of India's medium term target of 4 per cent
RBI now expects inflation at 2.8 per cent in Q4FY19 and 3.2-3.4 per cent in H1FY20
Either the cut had been discounted, or smart money doesn't see the stimulus as adequate
Making more credit available more cheaply is vital for Modi, who wants to please businesses, farmers and individual borrowers
The rate cut will benefit Modi's government as it will boost economic growth and lending to small businesses, according to Ashwani Mahajan, a leader of Rashtriya Swayamsevak Sangh
The yield on the most-traded 2028 sovereign bonds fell just seven basis points, the rupee eked out a gain and the main stocks gauge closed flat after the 25 bps rate cut
However, a point to note is that banks seldom pass on the entire rate cut
RBI's move may be beneficial as it is seen improving consumer sentiment
RBI Governor Shaktikanta Das hinted the central bank was open to more rate cuts, though he cautioned the monetary policy committee's decision on this regard would be 'data-driven'
Shorter-end bonds outperformed while the drop in yields on longer-tenor paper was limited on supply concerns
The guidelines for these measures will be released by the RBI by the end of this month
It was the first monetary policy meeting under the new governor Shaktikanta Das, who took over as Governor, RBI after the abrupt exit of Urjit Patel from the office in December last year.
RBI has reduced repo rate (at which RBI lends to banks) by 0.25 per cent to 6.25 per cent, a move that will translate into softening interest rates
Currently, the banks are mandated to extend collateral-free agricultural loans up to Rs 1 lakh. This limit was fixed in the year 2010
The central bank unexpectedly lowered interest rates and, as anticipated, shifted its stance to 'neutral' to boost a slowing economy after a sharp slide in the inflation rate
Here're the key takeaways from the sixth bi-monthly monetary policy meet of RBI -