Policy rate cuts are on cards. The monetary policy committee (MPC) of the Reserve Bank of India (RBI) has all the reasons to go ahead with a 25 basis point cut in the repo and reverse repo rates, if not 50 basis points.
The muted growth figure for Q4 of the last financial year virtually decided the course of action for the RBI. The growth in the gross domestic product (GDP) moderated to a 21-quarter low in Q4 of the fiscal year 2018-19. The slowdown is visible in both investment and consumption. What’s more, the stress in rural areas, global uncertainties and the non-banking financial company (NBFC)-led liquidity squeeze can continue to put pressure on the growth momentum in coming quarters.
