RBI rate decision is a tricky one, with economists split

According to 42 economists surveyed by Bloomberg, the Reserve Bank of India’s (RBI) interest rate cut decision remains at a coin-flip levels. The Indian central bank is set to announce its monetary policy decision on Thursday.

Key findings

“21 expect a 25 basis-point rate cut on Thursday, one projects a 50-point move and the rest see no change.

Das has already led the Monetary Policy Committee in cutting interest rates by 115 basis points this year, taking the repurchase rate down to 4%, the lowest since it was introduced in 2000.

The RBI’s target is to keep inflation in a range of 2%-6%, but consumer-price growth has exceeded the upper end of that band for most of the past two quarters.

Part of the reason has been higher food, fuel and gold prices as well as supply-side constraints due to the lockdown.

Given the upward surprise, the RBI may revise its forecasts higher: in May, it projected inflation would ease in the second half of the fiscal year toward the 4% midpoint.”

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