The unprecedented disruption caused by the coronavirus pandemic will force the Reserve Bank of India (RBI) to make a tough choice between cutting the rates further to revive the growth and sticking to its job of maintaining the inflation rate.
The central bank’s monetary policy committee (MPC) begins its three-day meeting on August 4 and will come with its decisions on August 6. Its primary job is to keep the inflation rate under control and reviving economic growth is only a secondary objective.
Analysts, experts and economists are divided on MPC's next move.
There is an urgency to revive the coronavirus-battered economy and demand for one-time loan restructuring is also growing but biting the bullet on a rate cut will not be easy for the central bank. Inflation is higher than expected while rates are already very low though transmission continues to remain a challenge.