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Statement: However, the market participants are eagerly waiting for a possible change in GDP growth forecast, inflation target for FY 17, along with the RBI’s commentary on foreign exchange reserves as around $30 billion of foreign currency non-resident bank deposits are maturing in September. In its April review, the RBI had slashed the repo rate, the rate at which banks borrow from the central bank, by 0.25 percent to 6.50 percent, to a more than five-year low. Since January 2015, the RBI has cut its repo rate by 150 basis points or 1.5 percent. Which of the following negates the above steps taken by the RBI?
Reasoning and Computer Aptitude
The Consumer Price Index (CPI), which is closely watched by the RBI in order to set interest rate policy, jumped to 5.39 percent in April vs 4.83 percent in March.
Global Crude Prices hitting a 12-year low of below $27 dollars a barrel in January 2016 made a strong case for rate cuts for RBI.
Loans and EMI will become cheaper for retail loans.
Rupee will strengthen against other currencies.
None of these
Correct Option is None of these
If repo rate goes down, loan rates will go down. In turn, the value of rupee will strengthen against other currencies. Consumer Price Index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households; hence it should be jumped from its previous rates. Reduction in global crude prices also plays an important role for the rate cuts by RBI. So, none of the options negates the above steps taken by the RBI.
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