RBI may cut policy rate again |
Expectations in the market are high as Reserve Bank of India`s Monetary Policy Committee meets on August 7 to discuss the monetary policy. Although most of the Indian banks have passed on less than a third of the rate cut announced by the RBI this year, the central bank is widely expected to reduce its policy rate by another 25 basis points. According to RBI governor, Shaktikanta Das, it takes a few months for banks to pass on the reduction. With SBI having cut its deposit rates with effect from August 1, it is expected that it will announce a further reduction in lending rates. The RBI brought down its repo rate, which was 6.5% in February, to 5.75% in the last policy meet in June. The average MCLR has come down by 21bps. Rating agency Crisil on August 1 had cut India`s GDP forecast to 6.9% as against 7.1% earlier stating that the sops announced so far might not be enough to pitchfork growth in this fiscal to, or above, the past 14-year average of 7% per annum. Policy action looks more attuned to consumption than investment demand, which means consumers will be the first to ascend as the tide turns.
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