economy | IST

No rate cut, but revamped RBI MPC may give a GDP forecast for FY21 on Oct 9: CNBC-TV18 poll

Mini

The revamped Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) may at last release a GDP forecast for the fiscal, which the apex bank has refrained from giving since the outbreak of the pandemic.

The revamped Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) may at last release a GDP forecast for the fiscal, which the apex bank has refrained from giving since the outbreak of the pandemic.
A majority of the 10 economists polled by CNBC-TV18 said the central bank would have to put a figure to its growth outlook in the October policy. “For the year 2020-21 as a whole, real GDP growth is also estimated to be negative,” Governor Shaktikanta Das had said during the past policy announcement on August 6.
Fifty percent of the respondents believe RBI will forecast an 8 to 10 percent contraction in GDP for FY21, while 20 percent believe the central bank may project a steeper contraction.
Nine out of ten economists polled said RBI’s CPI estimate for March 2021 will be above the MPC target of 4 percent. This is largely a given, now that retail inflation has trended above the committee’s tolerance band for 5 consecutive months.
All 10 respondents to the poll voted for a status quo on repo rates from the MPC given the inflation pressures. While several of them opined that the slowing economy could do with a helping hand by way of more rate cuts, they added that the MPC is bound by its inflation targeting mandate and will therefore have to hold fire.
Six out of 10 economists said there will be no further repo rate cuts through this entire fiscal for the same reason, one economist said there may be a 15 basis point reduction in February and three said there may be a quarter of a percentage point cut in the rate.
None of the respondents are expecting any reduction in reverse repo, or a change in the stance from the current accommodative mode.
The minutes of this particular policy will be keenly awaited, with some like Nomura and Standard Chartered already claiming that the stance of the MPC seems tiled to the dovish side, with the new external members appearing neutral to dovish. A ‘dovish’ stance implies a greater inclination to cut rates.
There is another school of thought that believes this meeting may be largely influenced by the views of internal RBI members, because of the last minute appointment of the new external members. Either way, the minutes will give a clearer picture.
next story

Market Movers

Currency

CompanyPriceChng%Chng