Below is the Views On Preview on RBI Monetary Policy by Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank
“With the aim of providing the much-needed boost to revive the Indian economy, and in the face of elevated levels of inflation, the Monetary Policy Committee (MPC) has cut the repo rate by a cumulative 155 basis points since February this year. However, the interest rates cuts have had little impact on demand stimulation or growth. The COVID-19 pandemic is hurting both businesses and consumers alike and the uncertainty around when things will normalize has led to lacklustre and muted demand and supply disruptions.
Having front loaded the rate cuts and with inflation still above the 6% mark, the MPC may decide to wait and watch and take a pause in August to monitor India’s progress in its fight against the virus – both from a health and economic point of view. The MPC could then possibly cut the policy rate by a further 25 bps in the policy meeting at the end of September, which is traditionally India’s busy season.”
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