STOCK MARKET BSE NSE

RBI expected to pause its rate cut cycle: Report

According to Dun & Bradstreet, the impact of monsoon on food prices is yet to be realised and could be visible by the end of next month.

Published: 25th July 2019 03:48 PM  |   Last Updated: 25th July 2019 03:48 PM   |  A+A-

RBI

The Reserve Bank of India. (File Photo | PTI)

By PTI

NEW DELHI: The Reserve Bank is expected to keep key interest rates unchanged in the ensuing policy review meet early next month even as there has been weakening of growth momentum in India.

According to Dun & Bradstreet, the impact of monsoon on food prices is yet to be realised and could be visible by the end of next month.

Nonetheless, the moderation in demand is likely to keep the overall inflation subdued.

While there has been weakening of growth momentum globally and in India since last year, the business optimism levels now are at a multi-year low raising concerns over revival in growth, said Arun Singh, Chief Economist Dun & Bradstreet India.

"After the 75-basis points rate cut and initiatives for liquidity management, the RBI should wait for the transmission of policy rate cut and impact of monsoon on prices of agriculture products before considering any rate change," Singh said.

According to him, the impetus to growth needs to be strong enough to pull up the optimism level of businesses and kick start growth momentum.

The IMF on Tuesday cut its growth forecast for India for this year and the next to 7 per cent and 7.

2 per cent, respectively saying the GDP will now grow reflecting a weaker-than expected outlook for domestic demand.

According to Singh, the need is to ensure a revival in domestic consumption demand and investment will follow.

"While the monetary stimulus in terms of policy rate cut and liquidity infusion has already been taken, much depends on the road map set by the government for the next two-three months," Singh said.

He added that given the fiscal constraints, the focus should be on increasing the efficiency levels of capital utilization and market-oriented reforms.

The next meeting of RBI's Monetary Policy Committee is scheduled from August 5-7. The central bank in the June policy review meet had cut interest rates for the third time this year.

Stay up to date on all the latest Business news with The New Indian Express App. Download now

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp