Key Highlights: 

  • RBI maintained status quo in June policy 
  • Policy repo rate stands at 6.25%
  • Reverse repo rate and MSF rate at 6% and 6.50% respectively

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As the Reserve Bank of India (RBI) readies to announce its bi-monthly monetary policy later this week, analysts unanimously expect a rate cut but it is the quantum of a cut that is being debated. 

Naresh Takkar, Managing Director and Group CEO, ICRA, said, “With the CPI inflation easing below the 2% floor of the inflation target band in June 2017, a reasonably favorable progression of the monsoon and kharif sowing so far, and limited evidence of a knee-jerk rise in prices following the imposition of the goods and services tax (GST), there is a high likelihood that the MPC would vote to reduce the repo rate by 25 bps in their upcoming meeting.” 

Consumer Price Index (CPI) inflation in India came at 1.54% in June 2017 in comparison with 2.18% in May 2017 and below market expectations which was at around 1.7%.

RBI August policy: A 25 basis points rate cut in the offing?

  • Low inflation to encourage RBI to cut rates next week: Reuters poll 
  • RBI Governor meets Jaitley before monetary policy review
  • RBI keeps interest rates unchanged but injects money via SLR cut