INSUBCONTINENT EXCLUSIVE:
second successive interest rate cut Thursday and said it stands ready to use all tools available to it to ensure liquidity in the banking
system, after lenders failed to fully pass on the previous cut to borrowers.
Economists predict the RBI will cut at least once more,
possibly as early as June, as businesses rein in investments amid political uncertainty fueled by elections starting next week
more aggressive action, prompting the rupee and bonds to drop.
The central bank, which targets inflation at 4 percent in the medium term,
lowered forecast for consumer price growth and said underlying pressures could ease given the recent slowdown
The RBI downgraded gross domestic product growth forecast for the financial year that began April 1 to 7.2 percent from 7.4 percent seen in
The total value of new projects fell to 1.99 trillion rupees ($29 billion) in the quarter to March from 3.12 trillion rupees in the three
months through June, according to data from the Center for Monitoring Indian Economy
reverses the 50 basis points of increases delivered by the RBI in 2018 and dragged the real interest rate below Malaysia and Indonesia
It also marks the most aggressive easing by any major emerging market central bank this year amid a slowdown in inflation and the United
the economy are crucial to provide support to growth," said Anubhuti Sahay, head of south Asia economic research at Standard Chartered Bank,
who expects one more rate cut this fiscal year.
Banks have so far been averse to passing on the cut, citing higher interest rate on deposits
and competition from the government for small savings.
The RBI said it will continue to add liquidity to ease constraints in the banking
Das said he will use all instruments including open-market bond purchases and foreign currency swap auctions to inject cash and ease
financial conditions after economic growth in the quarter to December hit a six-quarter low.
Policy RiskThe growth slowdown is a setback for
Prime Minister Narendra Modi, who came to power in 2014 on the back of pledges to reform the economy and create 10 million jobs each year
Modi is seeking a second term in office in elections starting April 11.
Uncertainty about the poll outcome has fueled worries about policy
continuity and has clouded the economic outlook.
Aurodeep Nandi, an economist at Nomura Plc in Mumbai, said he has a more bearish outlook on
economic growth of 6.8 percent in the current fiscal year
most likely in June, he said.
