Should RBI cut rates when banks are likely to do that themselves?
Two days before Reserve Bank of Indias bi-monthly policy, SBI had announced rates cut. What will be RBIs call now?
Key Highlights
- Reserve Bank of India will be announcing its bi-monthly monetary policy today
- SBI had announced the interest rate cut of savings account for balance up to Rs 1 crore and below.
- Following SBI, other banks are expected to make a call on rate cut soon
- Care Ratings expect RBI to maintain status quo this time
The six-member Monetary Policy Committee (MPC) headed by Reserve Bank of India (RBI) Governor Urjit Patel is set to announce its bi-monthly monetary policy on August 2, 2017 and markets are expecting a 25 basis points cut in repo rates.
The reasons given are ease in retail inflation (CPI) -- below the 2% floor of the inflation target band in June 2017, a reasonably favourable progression of the monsoon and kharif sowing so far, smooth implementation of the goods and services tax (GST).
RBI has been battling in balancing the inflation and maintaining liquidity from quite some time.
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