RBI cuts interest rate by 35 bps, EMIs likely to come down
Mumbai: In an unusual move, the Reserve Bank of India (RBI) on Wednesday reduced the benchmark lending rate by 35 basis points to 5.40 per cent amid concerns over slowdown in economy.
The fourth consecutive rate cut is expected to lower equated monthly instalments (EMIs) for home and auto buyers, and borrowing cost for corporate. Earlier this week, banks had assured Finance Minister Nirmala Sitharaman of passing on the benefits of RBI's rate cut to borrowers.
The 35 basis points (bps) cut in repo is unusual, as the RBI has been changing the interest rate by 25 or 50 bps in the past.
When asked why the RBI opted for a 35-basis point rate cut, RBI Governor Shaktikanta Das said it is not unprecedented, and added that a 25-basis point reduction was inadequate while 50 bps was excessive, so the MPC took a balanced call.
The central bank, after the meeting of rate-setting panel Monetary Policy Committee (MPC), also lowered the GDP growth estimates for the current financial year to 6.9 per cent from its June forecast of 7 per cent.
The MPC, headed by the RBI Governor, decided to continue with the 'accommodative' stance on monetary policy, indicating further easing of monetary policy depending on high-frequency indicators, such as inflation.
"On the basis of an assessment of the current and evolving macroeconomic situation, the MPC at its meeting today (Wednesday) decided to...reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points from 5.75 per cent to 5.40 per cent with immediate effect," the RBI said in a statement.
Noting that inflation is currently projected to remain within the target over the next 12 months, the MPC said since the previous policy in June, domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks.
It said even as past rate cuts are being gradually transmitted to the real economy, the benign inflation outlook provides headroom for policy action to close the negative output gap.
"Addressing growth concerns by boosting aggregate demand, especially private investment, assumes the highest priority at this juncture while remaining consistent with the inflation mandate," the RBI said in the third bi-monthly monetary policy review for the current financial year.
This is the fourth time in a row that the RBI has reduced the repo rate. In the earlier three policies, it has reduced the repo rate by 25 bps each
The RBI also revised downwards real GDP growth for 2019-20 to 6.9 per cent from 7 per cent in the June policy.
"...real GDP growth for 2019-20 is revised downwards from 7 per cent in the June policy to 6.9 per cent -- in the range of 5.8-6.6 per cent for H1:2019-20 and 7.3-7.5 per cent for H2 -- with risks somewhat tilted to the downside; GDP growth for Q1:2020-21 is projected at 7.4 per cent," the RBI said.
Consumer Price Index-based or retail inflation is projected at 3.1 per cent for the September 2019 quarter and 3.5-3.7 per cent for the second half of the current financial year, with risks evenly balanced.
Four MPC members -- Ravindra H Dholakia, Michael Debabrata Patra, Bibhu Prasad Kanungo and Shaktikanta Das -- voted to reduce the policy repo rate by 35 basis points, while two members Chetan Ghate and PamiDua voted to reduce the policy repo rate by 25 bps.
The next meeting of the MPC is scheduled during October 1, 3 and 4, 2019.
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Real Madrid fines Valverde and Tchouaméni half a million euros each for altercation
Barcelona (AP): Real Madrid slapped players Federico Valverde and Aurélien Tchouaméni with half-a-million-euro ($588,000) fines on Friday for their altercation during practice.
The massive fines came a day after the midfielders tussled when the team trained. Valverde said in a post on social media on Thursday that no punches were thrown. But Valverde knocked his head on a table and he suffered a small cut that required a brief hospital visit.
On social media, Valverde initially called it a “meaningless fight” with a teammate and said “everything has been blown out of proportion."
His employers, however, considered it a significant enough breach of team discipline to nail both Valverde and Tchouaméni with fines that bite even the bank account of a top soccer player. The half-a-million euro penalties reflect the reputational damage the club was enduring in a chaotic end to a disappointing season.
In a statement, the 15-time European champion said its disciplinary action was concluded after both players expressed to the club “their complete remorse for what happened and apologized to one another.”
Madrid added they also apologized to their teammates, the coaching staff and club supporters, as well as showing their willingness to accept whatever disciplinary action the club deemed “opportune.”
Tchouaméni was back training with Madrid on Friday, two days before they play at Barcelona in a clasico. Madrid has to win otherwise Barcelona will be crowned La Liga champion.
After being notified of the fine, he posted a public apology to the club and its fans on social media.
“What happened this week in training is unacceptable,” Tchouaméni wrote. "I say this while thinking about the example we are expected to set for young people, whether in football or at school.
“Above all, I am sorry for the image we projected of the club.”
Valverde was not at practice due to the head knock.
Both players are set to play in the World Cup next month, with Tchouaméni playing for France and Valverde for Uruguay.
Chaotic end to a poor season
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The run-in between the players, who for seasons have played side by side in Madrid's midfield, came after they argued this week in previous training sessions. But tempers boiled over on Thursday. Spanish media was rife with reports that the players previously disagreed over the club's decision to let coach Xabi Alonso go after just months on the job.
It was not the only altercation involving Madrid players during training this week. Álvaro Carreras confirmed he was in a “minor” incident with a teammate. Spanish media said he and fellow defender Antonio Rüdiger got into a scuffle.
Álvaro Arbeloa, the coach who was promoted from Madrid's reserve team when Alonso was fired in January, will face tough questions on what went wrong inside the changing room when he gives a press conference on Saturday ahead of the clasico at Camp Nou.
Madrid is facing a second consecutive campaign without a major trophy amid rumors in the Spanish media that club president Florentino Pérez is considering bringing back Jose Mourinho to straighten out his underperforming team.
