RBI to cut interest rates to 6.25% in Feb: Reuters poll

The Reserve Bank of India (RBI) is set to cut its main policy rate on Feb. 7, followed by just one more cut next quarter, according to economists polled by Reuters, who have kept their views largely unchanged from a month ago.

- Reuters

BENGALURU:

The steady outlook comes despite recent data showing economic growth slowed to an annual 5.4% in the July-September quarter, well below the 8.2% seen in the last fiscal year.

In its February 1 budget, the government is not expected to increase infrastructure spending, a main driver of growth in past years, leaving the onus on the RBI to revive the $4 trillion economy.

The central bank has injected massive liquidity into the banking system in recent days, which some economists take to mean a rate cut is imminent, despite relatively high inflation.

Over 70% of respondents, 45 of 62, in a Jan. 22-30 poll, forecast the RBI would cut its key repo rate by 25 basis points to 6.25% at the conclusion of its February 5-7 meeting, the first chaired by Governor Sanjay Malhotra, a former civil servant appointed late last year.