MUMBAI, 22 MAY, 2020 (GPN) : Dr. Joseph Thomas, Head of Research – Emkay Wealth Management shares hisp perspectiveon on the recent RBI announcement:

“The further cut in the repo rate by the RBI is more or less in line with expectations by majority of the market participants. The cut has been effected considering the fact that there is growing economic and financial stress on account of the pandemic involving all major sectors of economic activity. This would help in bringing down the market rates as also lending rates mostly at the short end of the curve. The potential reduction in the cost of funds and the extension of moratorium will be supportive of financial stability which is of extreme importance as of today. We expect the rates across the curve to move lower from the current levels ,though on a risk adjusted basis , the short to medium term would hold better value for long term investor portfolios. In view of the large issues at the primary for the rest of the year from both central and state governments, the likely gains at the long end may come with elevated risks. The fall in the reverse repo rate would serve as a disincentive to banks who hold huge sums of liquidity to look at alternatives including gilts.” ENDS