RBI governor will make policy announcement today
RBI has said, “Watch out for Bi-monthly Monetary Policy address by RBI Governor Shaktikanta Das at 12:00 hrs on August 06, 2020." Today, at 12 noon, the central bank's Bi-monthly Monetary Policy will be addressed by RBI Governor Shaktikanta Das.
On top of the 135 basis points in an easing cycle last year, from 6.50%, responding to slowing growth, RBI has already reduced the repo rate by a total of 115 basis points since February.
With the market expecting a 25-basis point cut, the RBI’s monetary policy committee will announce its policy decision today.
Despite a surprise spike in inflation, the Monetary Policy Committee of the Reserve Bank of India is likely to cut interest rates for the sixth straight time.
RBI has been lending to banks at 25 basis points (bps) to 4.9 percent, but however, economists divided over whether this could be the last rate cut before the end of fiscal year 2019-2020.
Highlighting its weakest pace since 2013, economic growth has slowed to 4.5 percent in the September quarter,but economists do not expect immediate recovery.
It is also expected to hinder transmission as tight credit conditions contribute to the credit growth to sub 8 percent year on year. From the earlier forecast of 6.1 percent for the current fiscal year, many economists expect RBI to revise GDP growth forecast downwards to around 5-5.5 percent.
Breaching the 4 percent target for the first time since July 2018, consumer price inflation quickened to 4.62 percent in October. Also, vegetable prices have started stabilizing but however onion prices are expected to remain high.
Under the directive of the government, the loan melas organized by public sector banks failed to make any significant difference to push retail loan growth (34 percent) in the July-September quarter. In order to alleviate the stress in the financial and real estate sector, reports suggest that the government is mulling a mini version of the troubled asset relief program similar to the US.