RBI may go for 50 bps jumbo rate cut to counter uncertainty: SBI report

A new SBI report on Monday projected a mega 50-basis point rate cut in June's RBI MPC policy, saying that a large rate cut could reinvigorate a credit cycle and act as a counter-balance to uncertainty.

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The cumulative rate cut over the cycle could be 100 basis points, said Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

"Domestic liquidity and financial stability concerns have receded. Inflation is expected to stay within the tolerance band. Keeping the domestic growth momentum intact should be the main policy focus and provide the justification for a jumbo rate cut," he mentioned.

With liquidity in an extended surplus mode, liabilities are getting repriced faster in the current rate-easing cycle. Banks have already reduced interest rates on savings accounts to the floor rate of 2.70 per cent.