RBI cuts repo rate by 25 basis points to 6.25%

RBI Policy MPC Cuts Benchmark Rate RBI Governor Emphasises Growth

The RBI MPC also made a decision to change the monetary policy stance from calibrated tightening to neutral.

RBI forecasts GDP growth for FY20 at 7.4 %, cuts repo rates by 25 basis points from 6.5% to 6.25%: The Reserve Bank of India (RBI) on Thursday cut repo rate by 25 basis points from 6.5 per cent to 6.25 per cent. Most polled respondents expected the central bank to only change the stance, to neutral.

Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Das and three others voted for a cut in interest rates. One, there will likely be a series of rate cuts from this point and the cumulative impact will considerably put pressure on banks to pass on the benefit to the end-consumer.

The government is already in an election mode.

GDP: RBI projects GDP to expand at 7.4 per cent in 2019-20 - 7.2-7.4 per cent in H1, and 7.5 per cent in Q3 - with the risks evenly balanced. The inflation rate is estimated at 3.2-3.4% in the first half of the year 2019-20 and 3.9 % in the third quarter of 2019-20, said RBI Governor Shaktikanta Das.

RBI's decision to slash the repo rate by 25 basis point to 6.25 per cent is a welcome and unexpectedly positive move, given the sops that the recent expansionary budget gave to farmers at an additional cost of Rs 75,000 crore per annum.

Newly obtained documents show health overhaul well underway
Elliott said Horwath's interpretation of that section was incorrect, but she would not say what it is actually meant to do.

Data released by the Central Statistics Office (CSO) showed consumer price index (CPI) based inflation at an 18-month low of 2.19 per cent in December against 2.33 per cent a month ago, as food prices continued to slide.

India's retail inflation declined from 3.4 per cent in October 2018 to 2.2 per cent in December, well below the bank's target of four percent. A career bureaucrat, Das is seen as more dovish on policy than his predecessor Urjit Patel, who quit in December following attacks on the central bank's autonomy.

The MPC also trimmed its economic growth forecast, to 7.2-7.4 percent during April-September, from its previous 7.5 percent estimate.

The Reserve Bank of India headed by a new chief, Shaktikanta Das, will probably drop its hawkish bias on Thursday, the first step toward a possible interest-rate cut this year as inflation drifts lower and the economy slows. "Going by the guidance, there is room for a further rate cut".

The Indian rupee weakened to 71.69 to the dollar immediately after the announced but strengthened soon after to 71.42.

The NSE Nifty initially slipped but closee up 0.06 percent at 11,069.40 while the 10-year benchmark government bond yield fell to 7.51 percent from Wednesday's close of 7.56 percent.

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