The reverse repo rate was reduced to 5.75 per cent.Bengaluru:The Reserve Bank of India (RBI) cut its benchmark interest rate by 25 basis points on Thursday, in a widely expected move to boost the economy, while keeping its monetary policy stance "neutral" despite subdued inflation.The six-member monetary policy committee (MPC) cut the repo rate to 6.00 per cent as predicted by 57 of 67 analysts polled by Reuters last week.
The reverse repo rate was reduced to 5.75 per cent.COMMENTARYDR.
JOSEPH THOMAS, HEAD RESEARCH - EMKAY WEALTH MANAGEMENT, MUMBAI"The RBI has adopted a very sensible and pragmatic approach by cutting the repo rate by 0.25 percent while keeping the policy stance neutral.""It takes cognizance of the likelihood or potential for inflationary pressures emerging from food prices and fuel prices, and also fiscal pressures from the large government borrowing programme.""Liquidity management through OMOs, repos and also the occasional currency swaps would help a somewhat better propagation of the impact of rate modifications to the lower levels."INDRANIL PAN, CHIEF ECONOMIST, IDFC FIRST BANK, MUMBAI"I'm happy to see the RBI is not toeing the market line because markets were expecting a much more dovish tone.
They have kept inflation balanced even thought their forecast is well contained within the 4 percent trajectory.""We need to watch out how the monsoon pans out.
The real issue is when food prices will actually reverse, we'll have to see if the trigger for that would be a lower monsoon.
This is something we must factor in before the MPC moves next.""My bet is that the next meet can be a miss from the RBI, unless you see a downside to the inflation trajectory.
If inflation continues to rise gradually then the RBI would possibly stay on hold."SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI"While the RBI has highlighted the upside risks to inflation, on account of El-Nino, food prices and fiscal situation, I think the tone is largely dovish.""If we see the Congress party's manifesto, it is a fiscal-expansionary policy, and even for the incumbent government, there is an emphasis to address rural distress, the unemployment situation, so these will have some fiscal implications.
Whether the Goods and Services Tax collection will stabilise remains to be seen, but prima facie the fiscal situation will remain a concern irrespective of which government comes to power.""If inflation continues to undershoot the 4 percent level, a rate cut of 25 to 50 bps cannot be ruled out in the next 12 months."Get the latest election news, live updates and election schedule for Lok Sabha Elections 2019 on TheIndianSubcontinent.com/elections.
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