RBI rate cut to spur demand: Allahabad Bank MD & CEO

New Delhi: RBI's decision to lower benchmark interest rate will boost investment and buttress consumer spending amid "growth concerns", provided banks transmit the reduction, industry bodies said Thursday.

"The rate cut was expected, considering the prevailing low domestic growth rate, weak demand conditions, slow industrial activity, selective credit growth, high real interest rate compared to other Asian countries and fear of a global economic slowdown," said Allahabad Bank MD & CEO S SMallikarjuna Rao.

"RBI has kept the stance unchanged probably by considering the increasing food prices, unpredictable nature of oil prices, weak monsoon expectations and increased borrowing programme by the Government which may push inflation up in the coming months," he added.

Ficci President Sandip Somany said Ficci had "expected a larger rate cut given benign inflation and slowing industrial as well as exports growth and liquidity concerns." PHDCCI President Rajeev Talwar said there is a scope of further reduction.