Mumbai: In a move that may lead to lower home, auto and other loan EMIs, the RBI Thursday cut interest rates for the third time this year by 25 basis points to their lowest level in nine years and signalled more easing as it looked to support an economy growing at the slowest pace since the BJP first came to power in 2014.The Reserve Bank of India (RBI) cut the repo rate to 5.75 per cent and reverse repo rate to 5.50 per cent and expected banks to transmit these to home, auto and other loan borrowers faster. Also Read – Dussehra with a ‘green’ twistWith all the six members of the Monetary Policy Committee (MPC) voting unanimously for a rate cut and switching of its stance to “accommodative” from neutral, RBI Governor Shaktikanta Das said the shift in the stance meant that an increase in interest rates is “off the table.” He wanted banks to expedite the transmission of the current reduction in rates as well as similar ones that happened in February and April. In three back-to-back bi-monthly monetary policies, the RBI has lowered interest rates by 75 basis points (0.75 percentage point). Also Read – India receives its first Rafale fighter jet from FranceWith India’s GDP growth slipping to a five-year low of 5.8 per cent in the January-March quarter – the first instance of growth falling below China’s in last few quarters, the RBI lowered its growth forecast for the economy to 7 per cent from the April view of 7.2 per cent for the 2019-20 April-March fiscal year. “Growth impulses have weakened significantly,” the RBI said in the monetary policy statement. The reduction in interest rate will help boost credit growth, helping arrest the slowdown in the economy ahead of the new Finance Minister Nirmala Sitharaman presenting Modi-2.0 government’s first budget next month that is widely expected to announce measures to generate jobs and revive the economy. With the 0.25 percentage point cut Thursday, the repo rate, at which the central bank lends to the system, comes down to 5.75 per cent, as was widely expected. Earlier, the repo rate was at 5.75 per cent in July 2010. Consequently, the reverse repo rate under the LAF stands adjusted to 5.50 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.0 per cent. MPC noted that political stability, high capacity utilisation, buoyant stock markets, an uptick in business expectations in the second quarter and financial flows are positive from a growth perspective.
“I call upon them to let go of their immediate political fears and focus on the greater good of achieving a sustainable long-term peace for the Palestinian and Israeli people,” Assistant Secretary-General for Political Affairs Miroslav Jenča told the Security Council in the monthly briefing on the Middle East, vowing continued UN support “in every possible way” to such efforts. “The current circumstances should not be accepted as ‘the new normal.’ Israelis and Palestinians should not be resigned to living under the threat of violence. However, a comprehensive strategy to limit that threat cannot rely uniquely on enhanced security measures. It must also address the primary elements motivating Palestinian anger,” he said. “Overcoming today’s challenges in Israel and Palestine will require unprecedented vision by Israeli and Palestinian leadership to see beyond today’s confrontations and take bold steps to create a peaceful future,” he stated.Mr. Jenča noted that Israeli statements committing to a two-state solution have yet to be followed by actions “demonstrating the sincerity of that commitment,” with settlements deepening roots in the occupied West Bank.Lamenting that chances to end the conflict now seem more distant than ever, he urged both sides not to continue to ignore the underlying causes perpetuating violence and fuelling extremism. “It is extremist voices that currently resonate. Voices that want to capitalize on the darkest of human emotions, while seeking to sabotage any genuine effort to rebuild trust. But where are the voices urging restraint?” he asked.“Where are the proponents of peace, tolerance and a shared Israeli-Palestinian future? How can we begin to shift the momentum back towards these advocates of reason? These questions demand answers, first and foremost from Israeli and Palestinian leaders. “It is for them to choose whether they will show leadership in building sustainable peace and security, or will allow the future of their people to drift in uncertainty as radicalism and extremism take over,” he emphasized.Despite a decline over the past month, stabbings, vehicle rammings and shootings by Palestinians against Israelis continue to claim victims on an almost daily basis as suspected assailants are shot and killed in return, and as clashes continue to result in Palestinian deaths, with seven Israelis and 34 Palestinians killed during the reporting period, Mr. Jenca noted.“On behalf of the Secretary-General, I reiterate the United Nations’ firm condemnation of all terrorist attacks,” he added. “Leaders on all sides have the responsibility to stop incitement and to consistently, and unequivocally stand against acts of terror and violence in all its forms.”At the same time he said perceived impunity for settler violence against Palestinians has also driven violence, while grave concerns continue to undermine prospects for ending violence and rebuilding trust. “The injustices associated with an occupation which shows no prospect of ending feed into a perspective – particularly among the youth – that they have nothing to lose by sacrificing their lives,” he declared, citing extensive movement restrictions on Palestinians limiting access to basic services and livelihoods, and Israeli demolitions of Palestinian homes in the Jordan Valley. “Israeli authorities have also carried out two punitive demolitions against families of those convicted or accused of attacks,” he noted. “Such acts are a clear violation of international law, aggravate an already tense environment and may be counterproductive.”On the positive side, he noted that four months after the Dawabsha family was brutally murdered in the West Bank village of Duma, Israel has made some arrests. “I take this opportunity to underscore the need to charge and swiftly bring the perpetrators of this terrible crime to justice,” he added. Turning to the situation in Gaza, Mr. Jenča noted that despite persistent security and governance challenges and funding shortages, reconstruction advances after last year’s war between Israel and Hamas, with more than 90 per cent of damaged schools and hospitals repaired, while repairs have been completed or are ongoing on about half of all partially damaged homes.“Reviving the economy and productive sectors also remains a major outstanding task,” he said, calling on donors to translate pledges into disbursement.