SME Times is powered by   
Search News
Just in:   • Sensex, Nifty climb new highs, end at record closing levels  • Fuel prices rise again across the country; petrol costs Rs 102/ltr in Mumbai  • SBI launches 'Kavach Personal Loan' scheme for Covid patients  • Auto sales down by over 61% from May'19 levels  • G7: Johnson urges nations to seek more 'feminine' economic recovery 
Last updated: 15 Jul, 2020  

RBI.9.Thmb.jpg RBI likely to cut rates on growth concerns

rbi-new.jpg
   Top Stories
» Auto sales down by over 61% from May'19 levels
» RBI to conduct third open market purchases G-SAP
» April IIP jumps on low base
» 'Full recovery of Indian economy likely only by Q3FY22'
» Agri exports jump to $ 41 billion despite pandemic
SME Times News Bureau | 15 Jul, 2020
Higher inflation unlikely to deter the Monetary Policy Committee (MPC) to hold any further rate that has become important to infuse liquidity and prop up economic activity dented by Covid-19 pandemic.

According an analysts, an additional 25-35 bps of repo rate cuts could be expected from the MPC given the sharp deceleration in growth when it meets next to take stock of the situation and recommend monetary actions. Further action remains contingent on the evolution of the growth-inflation mix, Kotak Institutional Equities said in a report.

The MPC decision on further rate cuts to prop up growth would, however, be weighted against a still high CPI inflation that remains above the MPC's upper limit of 6 per cent. But much of inflation is on account of higher fuel and gold prices while food inflation has started to normalize with the easing of supply disruptions.

With inflation expected to moderate below 4 per cent in 2HFY21, we continue to expect additional 25-35 bps of repo rate cuts given the sharp deceleration in growth and to address the issue of demand shock, the brokerage said in its report on the state of the economy.

Along with rate cut, other liquidity and regulatory measures can also be expected from the MPC to address any financial sector dislocations, the report said.

But with MPC front loading the repo rate cuts in anticipation of benign inflation trajectory in 2HFY21, scope for further aggressive rate cuts may be limited and would depend on the evolution of growth and inflation.

June CPI inflation moderated to 6.09 per cent as against 6.27 per cent in May amid favorable base effects despite increasing momentum.

The softening was led by lower food inflation of 7.9 per cent (9.2 per cent in May) owing to moderation observed across vegetables (1.9 per cent from 5.5 per cent in May), fruits ((-)0.7 per cent from 2 per cent in May), and sugar and confectionary (4.4 per cent from 6 per cent in May) (Exhibit 2).

Price of pulses, milk and eggs remain firm, even though the pace somewhat moderated. Meanwhile, fuel and light inflation rose to 2.7 per cent (1.6 per cent in May).
 
Print the Page
Add to Favorite
 
Share this on :
 

Please comment on this story:
 
Subject :
Message:
(Maximum 1500 characters)  Characters left 1500
Your name:
 

 
  Customs Exchange Rates
Currency Import Export
US Dollar
66.20
64.50
UK Pound
87.50
84.65
Euro
78.25
75.65
Japanese Yen 58.85 56.85
As on 13 Jun, 2021
  Daily Poll
COVID-19 has directly affected your business
 Yes
 No
 Can't say
  Commented Stories
» The Silk Road - A journey through history(4)
» Direct selling industry has potential to grow exponentially: QNet Ltd. Regional Director(2)
 
 
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter