RBI had previously cut repo rate by 0.25% each in January and March.
Worried over a spike in interest rates in the wake of steps to support the falling rupee, the RBI on Tuesday announced a slew of measures, including Rs 8,000 crore bond buyback, to ease liquidity and ensure adequate credit flow to the productive sectors of the economy.
The banking sector in India is reeling under Rs 8 lakh crore of non performing assets (NPAs) or bad loans, of which PSU banks alone account for over Rs 6 lakh crore.
The reason for the stickiness in bond yields can be many, but the most responsible is the liquidity deficit stance taken by RBI, says Anup Roy.
The progress on US debt ceiling talks, domestic inflation numbers and second quarter earnings of companies are expected to keep investors busy in the truncated trading week ahead.
Expressing disappointment over the hike in repo rate by the RBI, India Inc on Friday said a rate cut by the bank would have helped ameliorate sentiments as businesses are "reeling" under a tight liquidity crunch due to high cost of capital.
YES Bank raises base rate; HDFC Bank, Axis hike deposit rates.
New Reserve Bank of India chief makes his first monetary policy statement on Friday with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.
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