RBI's first monetary policy after Modi 2.0 takes charge, likely to go for 35 bps rate cut

It can be noted that since Governor Shaktikanta Das has assumed office, the central bank has cut its key rates by a cumulative 0.50 percent as inflation ebbed.

New Delhi: The Reserve Bank of India is all set to announce its second bi-monthly monetary policy while this will be its first monetary policy after Modi 2.0 took charge last week with analysts believing that the Central Bank will go for an unconventional 0.35 percent cut in its key lending rate.

The RBI under its new Governor Shaktikanta Das has cut its key rates by a cumulative 0.50 percent since he took charge. The central bank has slashed the short-term lending rate (repo rate) by 25 basis points (0.25 percentage points) each in its last two policy reviews.

News agency PTI, quoting several analysts and firms said that the central bank may go for a 0.35 percent cut in its policy interest rates.

Earlier this week, the Monetary Policy Committee headed by Das Monday started deliberations on its bi-monthly policy review.

"The Monetary Policy Committee (MPC) will meet during June 3, 4 and 6, 2019 for the second bi-monthly Monetary Policy Statement for 2019-20. The resolution of the MPC will be placed on the website at 11.45 AM on June 6, 2019," the RBI had said in its release.

India's GDP growth slowed to a five-year low of 5.8 percent in the fourth quarter of 2018-19 mainly due to poor performance of agriculture and manufacturing sectors, making some analysts believe that RBI needs to go in for a larger rate cut to reverse the current slowdown in the economy.

With PTI Inputs