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RBI policy today: Will the MPC cut rates?

Updated : February 07, 2019 08:19 AM IST

The Reserve Bank of India (RBI) will be announcing the sixth bi-monthly monetary policy statement today. This will be Governor Shaktikanta Das' first policy announcement after he took charge in December. The last three policies have maintained status quo on the repo rate. Will it be any different this time around? Here is what can one expect today:

This time the odds are divided. It can go either ways. There are some very sound data reasons which indicates a rate cut. For the next two-three quarters, the expectations are that inflation will be - at the most – at 4 percent for a better part below 4 percent and even the RBI model has not been very good. The last two years average has been largely below 4 percent.

Global factors, the Fed and the ECB are all pointing to lower growth and hence lower inflation. The Indian debt markets are still hurting and they can do with a little bit of help so a rate cut will certainly be helpful.

However, there are sceptics. 90 percent of the respondents of CNBC-TV18’s poll said that they expect a status quo, no rate cut. Citizens’ monetary policy committee (MPC) also voted 3:2 for a no cut.
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