RBI likely to cut repo rate for 5th time by 25 bps to boost ailing economic growth
The Reserve bank of India (RBI) is expected to cut the key policy rate again for the fifth in a row on Friday to complement the government's measures like reducing corporate tax and promoting credit offtake to spur economic activity during the festive season amid range-bound inflation. Cutting repo rate again is RBI's move to boost ailing economic growth.
The RBI is predicted to cut its key lending rate by 25 basis points (bps) to 5.15%, which would take cumulative cuts so far this year to 135 bps. The RBI Governor Shaktikanta Das headed Monetary Policy Committee (MPC) will announce the fourth bi-monthly monetary policy for 2019-20 on Friday, October 4, after its three-day meeting.
However, the central bank has already slashed the repo rate (short-term borrowing rate) four times aggregating to 1.10 percentage points since January. Meanwhile, Several analysts forecast one more cut of 15 bps in December.
"With current inflation remaining benign, we expect RBI to opt for a 40 bps rate cut at its policy review later this week in a bid to continue its support towards growth revival," said Yuvika Oberoi, an economist with Yes Bank in Mumbai.
Experts opined that another rate cut is on the cards as the government's hands are tied and the onus of taking initiatives now rests with the central bank.
