Corporate tax cut: RBI gets rate respite, cost of funds for firms to soften

Borrowing cost for corporates can come down owing to an improved balance sheet and rating upgrades

Interest rates in the economy could be nearing the bottom as aggressive cuts in corporate taxes by the Centre have obviated the need for further monetary policy support, analysts have said. 

But the borrowing cost for corporates can still come down owing to an improved balance sheet and rating upgrades. Indeed, rating agency Moody’s commented that the “move is credit positive for companies because it will enable them to generate higher post-tax incomes”. 

Bond yields jumped 15 basis points (bps) fearing absence of rate support and increased supply, but economists say the Reserve Bank of India (RBI) will again have to step