India central bank cuts repo rate by 25 bps, as widely expected
The Reserve Bank of India (RBI) cut its key repo rate by 25 basis points on Friday, in line with a consensus view, as record low retail inflation and a benign outlook for prices provided ample room to further support economic growth.
The monetary policy committee has now cut the repo rate by a total of 125 basis points since February to 5.25%. It held rates in August and October.
COMMENTARY:
MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI
"With inflation persistently undershooting, the RBI found it harder to ignore its core mandate of inflation management and decided to cut by 25bps."
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
"The RBI delivered on most fronts on Friday, lowering rates along our expectations and taking pro-liquidity steps, as well as moves to prevent re-hardening in borrowing costs."
"The policy decision was likely dictated by a higher weightage to below-target inflation, which had provided a sizeable real rate buffer."
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
"We believe that there would be scope for another 25 bps cut this cycle as inflation is expected to remain benign, and despite high real GDP print, there are no signs of over-heating in the economy."
TERESA JOHN, LEAD ECONOMIST, NIRMAL BANG, MUMBAI
"The 25bps rate cut, along with liquidity measures, will help keep bond yields in check and help sustain the momentum in the economy."
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"The repo rate cut, along with liquidity easing measures, announced by the RBI is exactly in line with our expectations."
"With RBI continuing to leave room open for further easing, we do not rule out another 25bps cut, with the likely terminal rate at 5% followed by a prolonged pause."
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