Rate cut: RBI faces pressure to do more

RBI will cut its repo rate by 25 basis points to 6.00 per cent - the lowest since November 2010.

The Reserve Bank of India (RBI) is likely to cut rate on August 2 by a quarter percentage point to a more than 6-1/2 year low after inflation slumped. 
 
RBI will cut its repo rate by 25 basis points to 6.00 per cent - the lowest since November 2010 - as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 percent, according to a poll done by Reuters.
 
However, the question is whether the central bank will signal readiness to ease more.
 
RBI's 4 per cent target and its projection of 2.0-3.5 per cent in April-September has mounted pressure from the government and others to cut rates by 50 bps or signal another 25 bps easing later this year.
 
It has warned that inflation could accelerate due to a seasonal rebound in food prices and factors such as planned pay hikes for government employees.
 
Retaining a cautious stance could cause tension with a government keen to lift the economic growth from January-March's 6.1 percent - fast by global standards but the lowest in over two years.
 
(Source: Agency) 

Event date: 
Wednesday, August 2, 2017

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