RBI Monetary Policy review: With inflation under check, experts expect Repo Rate cut from Shaktikanta Das

As the inflation is under control of the Narendra Modi government and Fed chair has changed its stance from 'hawkish to dovish', the market experts are expecting around 25-50 bps cut in the Repo Rate. Earlier, in RBI Monetary Policy review, the Repo Rate was cut 25 bps to 6.25 per cent. Speaking on the RBI Monetary Policy expectation, Amar Ambani, President & Head of Research, Yes Securities told Zee Business Online, “RBI’s strong intent on supporting economic growth under Governor Shaktikanta Das, with inflation under control, is evident. It will, therefore, come as no surprise if the Central Bank chooses to cut Repo once again by 25 basis points. In fact, some market participants are anticipating 50 basis points cut as well. But, I believe that the RBI should focus only on addressing the liquidity situation in the economy, wherein the real problem lies. It has already announced measures like Dollar Swap to ease liquidity somewhat."

Standing in sync with Yes Securities views Dr. Arun Singh, Lead Economist, Dun & Bradstreet said, “The upward risks to inflation are few and even if the risks materialise, the headline inflation is not likely to edge up to 4 per cent in the near term. We estimate the upward risks to emanate from the correction in the inflation of some of the commodities, upward biasedness in the oil prices, fiscal slippages and uncertainty over the distribution of monsoon. Core inflation remained high at an average of 5.7 per cent during Dec 2017 to Feb 2019 and is likely to stay elevated for some time." Singh said that the sharp increase in inflation in health and education has been being a primary factor. 

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"Adjusting for the sharp increase in health and education for the last few months, overall core inflation would have been lower by at least by 40-45 bps. Moreover, currently, demand push inflationary pressures remain benign. The current slowdown in GDP (Q3 FY19) is particularly led by the sharp moderation in the government and private sector consumption. Thus, we anticipate policy rates to be reduced by another 25 basis points rates in the April 2019 monetary policy meeting,” said Dr. Arun Singh of Dun & Bradstreet.

Elaborating upon the global indicators that may force RBI Governor to cut Repo Rate on April 4 Monetary Policy Review meeting Prakash Pandey, Head of Research at Fairwealth Securities said, "The Fed chief has changed its stance from hawkish to dovish and hence the inflation in India is expected to remain under control. So, a rate cut of around 25bps to 50 bps is expected from the RBI Governor Shaktikanta Das."