'Space to cut rate, but cautious about a pre-set easing path'

With inflation expected to remain moderate amid global uncertainty, there is policy space to cut interest rates, SAUGATA BHATTACHARYA, external member of the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC), said while adding that he favors a 'meeting-by-meeting' approach to policy easing, based on incoming data. He also said there was no voting by members on the stance in the April policy review meeting, which is not mandated by law, in a telephonic interview with Manojit Saha. Edited excerpts:

- Manojit Saha

The MPC has changed the stance in the April policy to accommodative, which means the policy repo rate can either be lowered or left unchanged.

Do you see further scope for a reduction in the policy repo rate?

At the outset, let me clarify that I am speaking only for myself, and these are my personal opinions.

At this point, the balance between growth and inflation is tilted towards the need to support growth. RBI's forecast for 2025-26 (FY26) growth is 6.5 per cent. If the tariff measures, retaliation persist—I am speaking from a place of extreme uncertainty right now—even if there is a short-term increase in inflation, over the medium term, inflation is likely to remain low or moderate. On the other hand, the resulting supply chain dislocations are almost certain to reduce global trade and growth, spilling over into India. The RBI has also unambiguously signaled the need to support growth, with a series of proactive measures to infuse system liquidity, including the ones scheduled for May. They are pre-emptively frontloading liquidity infusion for May. The two together—the potential for a further cut in the repo rate and the commitment to keep system liquidity in surplus—will help accelerate the transmission of policy easing across the entire spectrum of interest rates.

Is the aim of the large liquidity infusion quicker transmission?

RBI had earlier said it takes two quarters for effective transmission. Is transmission expected to be faster than that with these large liquidity infusions?