Impact of Russia-Ukraine conflict: “Inflation will likely be pushed closer to an average of 6 per cent,” says Kotak's Suvodeep Rakshit, while growth too will be lower by 50-100 basis points
The RBI MPC is likely to keep the repo rate unchanged and maintain an accommodative stance over the near term, says Rakshit.
Liquidity measures are already in place, however, the recent GSec auctions as well OMO operations are symptomatic of the strains in yield management.
With RBI revising down its average inflation forecast by around 140 bps and March 2018 forecast by more than 50 bps, it is imperative that the RBI would need to act.
Beyond the rate cut call, there are questions which at the current juncture can be very important. Answering these crucial questions will provide some reassurance to the markets and the economy in general.
It will be important to gauge the views of the members of monetary policy committee.
Speaking to CNBC-TV18, Arundhati Bhattacharya, Chairman, SBI, said it it won‘t be a big negative, if there are no rate cuts. But she did say that a rate cut brings in more confidence. A whole of experts, and industry experts also spoke on the RBI's latest report.
The reasons for a pause (repo rate at 6.50%) in the June meeting are quite definitive. On the domestic front, the central bank needs to assess the monsoons outturn (at least till July) and its impact.