Experts bat for 25 bsp rate-cut in RBI MPC

Mumbai, Dec 03

Even as the Monetary Policy Committee (MPC) began its three-day brainstorming session here on December 03, industry leaders are batting for 25 basis point repo rate-cut.

Talking to Bizz Buzz, Madhavi Arora, chief economist, Emkay, says, “I do hope that RBI may go for a further 25 bsp rate-cut post bi-monthly MPC.”

We think the case for a December cut is stronger, but a split MPC cannot be ruled out, she added.

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group is also in favour of the 25 bsp rate cut.

“We expect the RBI to announce a 25-basis-point rate cut, supported by benign headline inflation. Food prices are likely to remain in deflation, keeping overall inflation comfortably below target through the end of the fiscal year, aided further by the pass-through of GST rate cuts”, he said.

Despite strong growth momentum, we believe that there is a possibility of a 25-bps rate cut by the RBI in December, says a report by Careedge.

The MPC to maintain its neutral stance, signalling a likely end to the current easing cycle. However, if the RBI chooses to not cut the policy rate amidst strong GDP growth data, the Governor will opt for a dovish tone to keep the option open to cut later, the report goes on.

However, another section of economists think that RBI may maintain a status quo on key policy rates this time for obvious reasons.

Broad basing growth, sans any rate cut, may necessitate ushering in ‘neutral regime’ tantamount to ‘calibrated easing’ by targeting yields and liquidity management simultaneously, says a study by the SBI group’s internal research.