Fiscal Policy Review: Repo Rate Likely to be Unchanged


New Delhi, April 07: India Inc. has pitched for rate cut to boost economic activities, but Reserve Bank of India (RBI) may not oblige in its annual policy today as unseasonal rains may adversely impact food inflation in the coming months. RBI Governor Raghuram Rajan is expected to draw a balance between the need to cut interest rate and contain inflationary expectations.

The RBI has cut interest rate twice since January and is unlikely to further reduce it this time. However, RBI may indicate a rate cut in future after seeing some improvement on the price front.

The RBI had lowered its policy rate by 25 basis points to 7.5% on March 4, after a similar cut on January 15, on the back of softening inflation and the government's commitment to continue with the fiscal consolidation programme. Both the rate cuts were announced outside RBI's regular policy review.


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