The Indian central bank’s decision in March to slash interest rates in an unscheduled meeting was the biggest surprise since a Monetary Policy Committee was set up four years ago, according to a new research paper
Getty ImagesThe panel’s move to cut the benchmark repurchase rate by 75 basis points caught the market unaware, wrote authors Aakriti Mathur from The Graduate Institute in Geneva and Rajeswari Sengupta of the Indira Gandhi Institute of Development Research in Mumbai
By Anirban Nag
The Indian central bank’s decision in March to slash interest rates in an unscheduled meeting was the biggest surprise since a Monetary Policy Committee was set up four years ago, according to a new research paper.
The panel’s move to cut the benchmark repurchase rate by 75 basis points caught the market unaware, wrote authors Aakriti Mathur from The Graduate Institute in Geneva and Rajeswari Sengupta of the Indira Gandhi Institute of Development Research in Mumbai. They assessed trends and reactions in overnight indexed swap rates.
Bloomberg
“First, it was an unscheduled meeting, moved up from the originally planned early-April meeting,” Mathur said of the decision, which included the rate-cut as well as other easing measures in response to the pandemic, such as moratoriums on bank loan repayments. “All these three factors combined, implied a large, positive surprise for the financial markets.”
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Getty Images
Bloomberg
Get Unlimited Access to The Economic Times
