RBI cuts repo rate again, down to 4%

The central bank refrained from giving a projection for GDP growth for the current financial year and stopped at saying that growth expected in the “negative territory” with some pick-up in growth impulses from the second half of 2020-21 onwards. “It is in the growth outlook that the MPC judged the risks to be gravest,” Mr. Das said.

Inflation target has also been held back by the central bank. “The MPC is of the view that headline inflation may remain firm in the first half of 2020-21, but should ease in the second half, aided also by favourable base effects,” Mr. Das said.

“By Q3 and Q4 of FY20-21, it is expected to fall below target. Thus, the MPC’s forward guidance on inflation is directional rather than in terms of levels. Going forward, as and when more data are available, it should be possible to estimate the path of inflation with greater certainty,” he added. Since February last year, the RBI has reduced the policy repo rate by a cumulative 250 bps, from 6.5% to 4%. And there could be further scope for a rate cut if the inflation trajectory evolves as expected, RBI said. The bank also extended the loan repayment moratorium for another three months, till August 31.

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