Chidambaram Welcomes RBI’s 25 bps Rate Cut, Says More Steps Needed to Boost Economy

By A Staff Reporter

New Delhi: Reacting to the Reserve Bank of India’s decision to reduce the repo rate by 25 basis points to 5.25%, Congress MP and former Union Finance Minister P. Chidambaram on Friday said the move was in line with prevailing economic indicators and had been widely anticipated.

Chidambaram noted that both government and RBI data point to a steady decline in inflation. “This was expected because according to RBI and Government data, the inflation has come down. Wholesale inflation has also come down, and there is enough liquidity,” he said, emphasising that the macroeconomic conditions had created the space for monetary easing.

He said the cut would bring relief to borrowers, especially those repaying loans through EMIs. “It should help those who borrow on an EMI basis,” he stated, adding that while the reduction may also benefit investors, the impact would be limited. “It should also help only marginally, the investors.”

Chidambaram, however, cautioned that the rate cut alone would not be enough to address broader economic concerns. “We will have to wait and see whether this is sufficient or more has to be done,” he said. He stressed that besides adjusting the policy rate, both the government and the RBI must act on other fronts to support growth. “Apart from the policy rate, there are several other things that the Government should do and the RBI should do. I hope, after reducing the policy rate, they attend to the other things,” he added.