New Delhi: The Reserve Bank of India (RBI) will announce its second bi-monthly monetary policy for current fiscal year in Mumbai on Thursday, amid speculations that another round of rate cut, third in a row, may be announced to prop up the economic growth which dropped to a five-year low in the final quarter of 2018-19. Also Read - We Have Certain Concerns on Cryptocurrencies: RBI Governor Shaktikanta Das
The 3-day meeting of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, began on Tuesday. Also Read - Will Cryptocurrencies Have Impact on Financial Stability of Country? RBI Expresses Concern
The central bank had cut the short-term lending rate (repo rate) by 25 basis points each in its last two policy reviews. Meanwhile, India’s largest bank – State Bank of India (SBI) – in a recent research report had said that the RBI needs to go in for a larger rate cut in the next monetary policy review in June to reverse the current slowdown in the economy. Also Read - RBI Recruitment 2021: Apply For These Non CSG Posts From Feb 23 | Check Vacancy Details Here
Speaking to PTI, on what can be expected from the MPC, CII Director General Chandrajit Banerjee said the RBI needs to continue lowering interest rates in order to provide a stimulus to the economy.
He said, “This is needed to address the slowdown in production and sales across consumer goods categories including segments such as passenger cars, two-wheelers as well as non-durables.” Adding, Das said that with inflation still far below the RBI’s target of 4 per cent, there is an ample room for a reduction in the policy rate.
On the other hand, Shanti Ekambaram, President, Consumer Banking, Kotak Mahindra Bank opined that macro environment was conducive for the RBI to cut rates.
Further, Finance Secretary Subhash Chandra Garg said there has been reduction in policy rate in the last two policies announced since February.
India’s GDP growth slowed to a five-year low of 5.8 per cent in the fourth quarter of 2018-19 mainly due to poor performance of agriculture and manufacturing sectors.
(Inputs from PTI)