INSUBCONTINENT EXCLUSIVE:
RBI repo rate is likely to fall to 6%.
The Reserve Bank of India (RBI) is expected to announce a
reduction of 25 basis points (0.25 per cent) in the key interest rate to 6 per cent today
The central bank is due to release its first bi-monthly policy statement for financial year 2019-20 at 11.45 am
Any reduction in the repo rate, the key interest rate at which the RBI lends short-term funds to commercial banks, would mark the second
reduction so far this calendar year, and also the second under Governor Shaktikanta Das, who assumed office in December last year
Here are 10 things to know about RBI Monetary Policy:The six-member Monetary Policy Committee (MPC), headed by the RBI
governor, began its three day review on Tuesday
Thursday's policy statement marks the last before the general election due later this month.More than 85 per cent of the nearly 70
economists polled by news agency Reuters expect the central bank to cut the benchmark lending rate to 6.00 per cent today.Economists say
consumer inflation staying within the central bank's comfort zone leaves room for monetary easing."We believe that RBI would go in for 25
bps rate cut to provide much needed thrust to the economic growth
In addition, inflation being well within the RBI's target would further provide an elbow room to the RBI to lower the interest rates,"
said credit ratings agency CARE in a note.Consumer inflation has remained within the RBI's medium-term target of 4 per cent for seven
Consumer inflation - gauged by the Consumer Price Index (CPI) - picked up to 2.57 per cent in February from the 19-month low of 1.97 per
cent the previous month.India's growth in GDP or gross domestic product slowed to 6.6 per cent in the October-December period, its slowest
pace recorded since the quarter ended September 2017.But some analysts say that given the weakening GDP (gross domestic production) growth
and subdued inflation outlook, a larger reduction in the key rate is warranted."Some market participants are anticipating a 50 basis points
But I believe that the RBI should focus only on addressing the liquidity situation in the economy, wherein the real problem lies," said Amar
Ambani, president and head of research, Yes Securities.The country's debt markets appear to have priced in a 50 basis-point cut
Trading at 5.90 per cent, the one-year interest rate swap works out at 5.75 per cent on a daily basis, putting it 50 basis points below the
current repo rate, news agency Reuters reported quoting rate derivative dealers.The stock markets were trading on a flat note with a
election schedule for Lok Sabha Elections 2019 on TheIndianSubcontinent.com/elections
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