Crash dims rate cut hopes tomorrow

THE RUPEE HITTING a new low against the dollar has virtually ruled out chances of a rate cut in the Monetary Policy Committee meeting on Friday, most economists said.

- MAHESH NAYAK

The strong performance on the growth front will also give the central bank comfort to wait and watch.

“MPC will not cut interest rates, opting instead fora pause,” said Madan Sabnavis, chief economist at Bank of Baroda.“Economics demands rational trade-offs, not sentiment-driven decisions,’ Sabnavis added.

Gaura Sengupta, chief economist at IDFC First Bank, said, “We have a pause view for December as growth recovery is showing signs of becoming broad-based. Moreover, real rate analysis indicates that monetary policy is growth-supportive at current policy rates.”

Kunal Sodhani, head of treasury at Shinhan Bank, added the twin factors of growth and rupee will give the RBI limited room to considera rate cut.