RBI to announce its bi-monthly policy, experts eye rate cut by 25 bps

New Delhi: Expectations related to cut in repo-rates by 25 bps (basis points) are high as the Reserve Bank of India is all set to announce its last bi-monthly policy of the current fiscal.

The RBI governor Urjit Patel is scheduled to take stage at the Reserve Bank of India (RBI) headquarters in Mumbai on Wednesday at 1430 hours to announce the monetary policy of RBI.

This monetary policy also holds an interesting fact that it would be the first one after the announcement of Union Budget 2017, the second one post-demonetisation of high denomination notes and the last one of the current financial year.

Expectations from Urjit Patel:

• Some Industry experts, economists and bankers are expecting the rate cuts in the policy that has been prepared by the Monetary Policy Committee (MPC) led by Urjit Patel.
• According to the experts, consumption and investment took a hit, after the demonetisation, that had brought the retail inflation to a three-year low of 34 per cent which has made space for the RBI to effect a rate cut to an extent of 25 bps.
• While Noumra is assured of rate cuts and said that it may be the last one for the rest of the year, rates strategist of Nomura India Vivek Rajpal has stated that if RBI cuts rate by 25 bps, bond yields will rally only by 5-10 basis points. He expects the 10-year bond yield is unlikely to go to the level of 6.35.

It is worth mentioning that the Sensex has closed 104 points below the red line (50-day moving average) ahead of the crucial RBI announcement.