RBI Governor Sanjay Malhotra will announce the resolution of the Monetary Policy Committee at 10 this morning. Considering that the RBI has reduced the repo rate by 100 basis points in three tranches since February, some experts expect a status quo today, while a few others are hopeful of a 25 basis points cut. According to an SBI Research Report, the committee may go for a 25 basis points cut in view of soft inflation, better GDP growth and tariff uncertainty.
It adds that empirical evidence suggests a strong pick up in credit growth whenever the festive season has been early and has been preceded by a rate cut. However, according to a crediting rating agency report, the RBI is expected to hold off on further easing, allowing time for the full impact of earlier measures to materialise. Meanwhile, with retail inflation trending below 4 per cent since February this year, some experts believe that the RBI would wait for more macro data before changing the existing repo rate.
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