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RBI monetary policy: Here's what you should watch out for

Updated : October 03, 2019 10:32:16 IST

The Reserve Bank of India (RBI) will release its fourth bi-monthly monetary policy for 2019-20 on Friday. As the festive season is almost here and the D-Street is expecting a Diwali gift. Will the central bank cut rates for the fifth time in a row?

The recent volatility in crude oil prices following the drone attacks on Saudi Aramco, coupled with the potential impact of the government's recent fiscal measures on fiscal deficit & inflation, could mean that the room for a rate cut may be limited.

The majority of respondents polled by CNBC-TV18 said the six-member monetary policy committee (MPC) will deliver a 25 bps cut and 40 percent expect a 40 bps cut.

For the entire fiscal year including the October policy, a majority expect a sum total of 40 bps reduction in repo rates and few even expect a 50 bps cut.

The industry is also clamouring for a rate cut tomorrow. In fact, some believe a sharp one-time cut in rates is more effective than a gradual easing. CNBC-TV18's Latha Venkatesh shares her take on tomorrow's monetary policy meet.
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