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RBI cuts bank rate by 0.5% to 7%

BUDGET 2001

The Reserve Bank of India on Thursday said it has cut its bank rate by 50 basis points to 7 per cent, effective close of business on March 1.

Following are immediate comments from analysts:

K R Bharat, managing director, Credit Suisse First Boston: "The cut is good for the economy. It will stimulate growth. Lower interest rates are good news for the equity markets, in particular for the banking sector. This is in continuation of the direction set in the budget."

Anil Singhvi, whole-time director, Gujarat Ambuja Cements: "It is a welcome move. There was a pointer to this in the Finance Minister's budget speech. It indicates we are going for a lower interest rate regime which is a very good sign."

Gul Teckchandani, chief investment officer, Sun F&C: "The cut is very positive. The moves are now in the same positive direction. All we want now is the privatisation of BALCO to keep the sentiment up in the capital markets."

Regional head of treasury at a foreign bank, Madras: "The cut was expected but the timing has come as a surprise. Given the small savings rate cuts in the budget I think the market expects more aggressive rate cuts going ahead which I think are unlikely to materialise as we may have reached near the bottom on rates."

"I think going forward the bond market should be fairly flat with not too much volatility."

Budget 2001
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