Most experts are penciling in another 25 bps rate cut in 2019 as inflation is expected to remain below RBI’s target.
A 25 bps cut could be called as new financial year gift from the Reserve Bank of India (RBI), but lingering concerns of a slowdown in the global economy remain a concern.
On Thursday, the Reserve Bank of India (RBI) on expected lines slashed repo rate by 25 bps to 6 percent and kept the stance unchanged to ‘Neutral’. This is the second rate cut in 2019.
“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent while supporting growth,” the central bank said in a statement.
“The RBI has adopted a very sensible and pragmatic approach by cutting the repo rate by 0.25% while keeping the policy stance neutral. It takes cognizance of the likelihood or potential for inflationary pressures emerging from food prices and fuel prices, and also fiscal pressures from the large government borrowing program,” Dr. Joseph Thomas, Head Research- Emkay Wealth Management.