INSUBCONTINENT EXCLUSIVE:
again at its October meeting, making it the fifth in a row, according to economists in a Reuters poll who said the central bank's decision
to ease by 35 basis points on Wednesday was right
While a survey taken ahead of August's meeting showed a 25 basis points rate cut was a done deal, the RBI was expected to keep rates
unchanged for the rest of this year
However, a more recent Reuters poll, conducted August 7-8, predicted the RBI would ease its benchmark lending rate by 25 basis points to
quarter of next year, although much depends on global conditions."India is amidst an economic and financial slowdown with minimal support
from fiscal policyThe responsibility is being borne by monetary policy but more is needed at this front," said Shobana Krishnan, chief
economist at Edelweiss."Traditional parameters of growth and inflation are far from showing any near term pickup Therefore, we believe the
case for another 50 basis points cut in fiscal year 2020 is justified," she said.The central bank cut rates by 35 basis points to 5.40 per
If the RBI does cut rates in October and early next year it will be the most aggressive amongst major central banks in easing policy.The RBI
lowered its economic growth forecast for the current fiscal year on Wednesday and said inflation would not breach its medium-term target of
4 per cent in the near-term
However, the benefits of the RBI's easing this year have not been completely transmitted to borrowers."The transmission of rate cuts has
been fairly weak so far," said Rini Sen, economist at ANZ."Bank lending rates have not moved in tandem with the repo rate, which raises
doubts over how much of this easing eventually trickles down to the real economy."When asked if the RBI's decision to not cut interest
That supported Governor Shaktikanta Das' statement that a 25 basis points cut would have been "inadequate in view of the evolving global and
domestic macro-economic" conditions, while a 50 basis points cut was seen as potentially "excessive.""In an environment of prolonged stress,
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