The Great Debate (India)

Will the RBI cut key rates in its policy review?


The Reserve Bank of India (RBI) announces 2009/10 fiscal’s first quarter monetary policy on July 28 and most analysts and traders expect it to leave key rates unchanged.

Reserve Bank of IndiaIndia’s economic outlook is mixed as a weak monsoon could dampen signs of nascent economic recovery, food prices are soaring even though headline inflation is benign and the borrowing programme is huge despite ample cash conditions.

The RBI has already cut the repo rate, or its key short-term lending rate, by 425 basis points to 4.75 percent in six steps since October 2008 as it tried to guard a slowing economy against the global financial crisis.

Should the RBI cut its key lending rates further?