MUMBAI: India’s central bank is widely expected to deliver a third consecutive rate cut on Friday as muted inflation provides ample space to focus on boosting economic growth further.
A strong majority of economists, 53 of 61, in a Reuters poll expect the Reserve Bank of India’s monetary policy committee (MPC) to cut the repo rate to 5.75%.
Two respondents see a cut of 50 basis points and the remaining six expect no change.
“Despite no pressing need for a third successive rate cut on June 6, we expect the MPC to cut – an opportunistic move amid the lower-than-expected inflation outcome and outlook, and retain the stance as ‘accommodative’,” Barclays economists wrote in a note.
“The RBI may be tempted to lower inflation forecasts, but it may be prudent not to,” they added.
Retail inflation has slowed faster than expected and dropped to a near 6-year low of 3.16% in April.
RBI to cut rates by 25 bps on June 6, then once more in August
The RBI expects it to average around 4% during the year but many economists expect it to be lower.
On the growth front, India’s GDP surged 7.4% in the March quarter, much faster than forecasts and driven by construction and manufacturing.
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