Comment | Why Shaktikanta Das’s nudge will not bring down lending rates
There are a number of structural problems that affect monetary policy transmission.
February 21, 2019 / 08:11 AM IST
Reserve bank of India governor Shaktikanta Das will discuss the issue of monetary policy transmission with the heads of banks on February 21. The central bank surprised the market earlier this month by cutting the repo rate by 25 basis points. However, nudging banks to lower lending rates is unlikely to work at this stage due to a variety of structural and cyclical reasons.
For instance, deposits in the banking system are increasing at just over 9 percent, while lending to the commercial sector is...