New Delhi: SBI research reported on Monday that RBI is expected to cut key lending rates by .25% later this week in view of benign inflation.
On Tuesday, the 6-member Monetary Policy Committee headed by RBI governor Shaktikanta Das will start its 3 day meet in Mumbai and will announce the policy on February 7.
“We now expect RBI to change its stance in February, but it is likely to remain on a pause mode. The first cut might happen in April 2019, but we believe it will be shallow rate cut cycle. However, we will not be overtly surprised if RBI delivers a 25 bps rate cut on February 7 itself”, said SBI Ecowrap.
There are few reasons that indicate as to why RBI might just prefer to cut in February. Firstly, the headline inflation still remains significantly benign and the also has growth has hit a soft patch, said the reports. Another reason being, the credit growth has declined for the second fortnight, implying that incremental credit growth data which is available till December is showing significant decline.