Inflation hits record low , RBI likely to cut rate on August 2

Inflation hits record low , RBI likely to cut rate on August 2
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Story Dated : July 31, 2017

With retail inflation receding to record low levels, the Reserve Bank is likely to cut the benchmark lending rate by at least 0.25 per cent in its third bi-monthly monetary policy review on Wednesday, say experts and bankers.

Encouraged by significant price improvement, bankers expect RBI, which has kept rates on hold at 6.25 per cent for the fourth straight time citing risk to inflation, to change its monetary stance and may even go for an aggressive rate cut. “The expectation is of rate cut of a minimum 25 basis points as inflation has eased and also as industrial growth continues to remain weak. A rate cut will give a push to credit growth which has been sluggish from last many quarters,” Bank of Maharashtra managing director R P Marathe said.

Echoing similar views, Indian Bank Managing Director Kishor Kharat said there is an expectation that there could be 0.25 per cent rate cut by RBI this time. The RBI may not touch Cash Reserve Ratio or Statutory Liquidity Ratio as there is adequate liquidity in the market, Kharat added.

The six-member monetary policy committee (MPC) of the RBI headed by RBI Governor Urjit Patel will announce the outcome of the meeting on August 2 afternoon.

According to HDFC Bank Managing Director Aditya Puri, there is always a case, but there are a number of members on the committee who will examine it.

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