The Hindu Business Line

RBI’s three-day MPC meet under way

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The RBI’s rate-setting panel started its three-day deliberati­ons for the first bi-monthly monetary policy of 2019-20 on Tuesday, amid expectatio­ns of a cut in key lending rate by another 25 basis points to boost economic activities.

The RBI had reduced the repo rate by 25 basis points in February after a gap of 18 months. A back-to-back cut in interest rate would provide relief to borrowers in the election season.

The six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikant­a Das, will announce the resolution of the meeting on Thursday.

It would be the first bimonthly monetary policy of 2019-20. Das has already held meetings with stakeholde­rs, including industry bodies, depositors associatio­n, MSME representa­tives, and bankers.

Industry and experts are expecting the regulator to cut the key lending rate by 0.25 per cent to boost the economic activities, as fears loom large about global economic slowdown impacting India’s growth prospects.

A back-to-back cut in interest rate would provide relief to borrowers in the election season, say experts. According to ratings agency ICRA, the RBI could go for a 25 bps rate cut in the upcoming meeting of monetary policy committee.

The director-general of CII, Chandrajit Banerjee, said the inflation trajectory has remained benign, which further warrants a reduction in interest rates.

“In view of the visible signs of growth slowdown in the second half of 2018-19, it is requested that the RBI should reduce the repo rate by at least 25 basis points in the upcoming policy and maintain a softening trend in monetary policy.”

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