RBI Could Announce Interest Rate Cut Of 25 BPS, Say Experts

Monetary Policy Committee is set to announce decision on August 6.

Sohil Nikam

July 27, 2020

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The Reserve Bank Of India (RBI) could very well announce an interest rate cut of 25 basis points in its upcoming monetary policy review. Experts feel this decision will be motivated by the need to revive the coronavirus-hit economy notwithstanding the marginal uptick in inflation. The Monetary Policy Committee (MPC), headed by RBI Governor, Shaktikanta Das, is set to meet for three days beginning August 4 and announce its decision on August 6.

Following the arrival of the COVID-19 crisis, the MPC has met twice, once in March and once in May. Over these two meetings, it had cumulatively cut the policy repo rate by 115 basis points. “We anticipate a further asymmetric cut of 25 basis points in the Repo Rate and 35 basis points in the Reverse Repo Rate, in a split decision from the MPC,” said Aditi Nayar, Principal Economist, ICRA, while Union Bank of India’s Managing Director and CEO, Rajkiran Rai said, “There is a possibility of a 25 basis points cut or they may hold on (the rate).”

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