Government removes the interest rate cap; Banks rejoice!
The government has officially released H1 FY24 monetary policy statement. Here are the things that you should know:
- Interest rate cap withdrawn; Rate corridor to increase lending rates by 100bps;
- Transition to interest rate targeting system; 6.5% targeted policy rate ± 200bps corridor introduced
- Removal of rate cap will give a breathing space for banks’ squeezed spread.
- Companies with high cash reserves to churn benefit
- Streamlining exchange rates towards unification; New reserve calculation on the cards
- BB sets 6.0% inflation target and 7.5% GDP growth target for FY24, 6% Reserve Money & 10% M2 growth projection likely to be driven by public sector credit growth
