Analysts See Another 25 bps Rate Cut

As inflation remains at subdued level, monetary easing by the MPC is likely to continue

- DIPAK MONDAL @ New Delhi

As the Monetary Policy Committee of the Reserve Bank of India (RBI) sits down to deliberate on interest rates for three days, beginning Wednesday, it will have its eyes firmly on external factors, which is the biggest risk currently at sight for growth in India. Keeping in view the fact that inflation is under control, most analysts believe the rate-setting panel might cut the repo rate by another 25 bps.

With consumer price index (CPI) based inflation forecast to trail 4% for a large part of this fiscal, monetary easing by the MPC is likely to continue. A 25 bps rate cut is expected this week, followed by two more cuts over the subsequent two policy reviews, taking the repo rate to 5.25% by the end of the cycle.