OPINION: End of the rate-cut cycle?

from BUSINESS LINE, July 29, 2009 Over the last few months, the Reserve Bank of India (RBI) has not only cut repo rates aggressively but also pumped huge liquidity into the system. Consequently, interest rates have come down, though not to the lows the RBI would have liked them to be.

This, together with the Government's fiscal stimulus, has set in motion a nascent recovery in the economy.

Improved performance of sectors such as cement, steel and automobiles is clearly linked to the government stimulus.

There are some positive signs on the external front but it is now becoming clear that recovery in advanced economies will be weak and sluggish. The poor …