From an overall perspective, lower interest rates are better because they induce borrowers to take more loans. Staring at the coming financial year, we are at a juncture of opposing forces on movement of interest rates. To understand how interest rates are supposed to move in the economy, the pivot takes cue from RBI’s overnight repo rate. That is, RBI signals interest rate movements in the economy by increasing or decreasing the repo rate, which is currently at 6.25%. Normally, one would expect that if RBI is reducing interest rates, the interest rate structure in the entire economy would follow suit.

Source: Mint April 02, 2019 02:03 UTC