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.