3-Day RBI meet likely to cut repo rate

In the announcement on December 5 the Central Bank is likely to support growth that has continued to slip to more than six-year low on slump in manufacturing, bankers experts said.

New Delhi: The Reserve Bank of India (RBI) may cut interest rates for the sixth straight time at the end of a three-day review meeting beginning on Tuesday.

In the announcement on December 5 the Central Bank is likely to support growth that has continued to slip to more than six-year low on slump in manufacturing, bankers experts said.

RBI has cut interest rates on every single occasion the multi-member monetary policy committee (MPC) has met since Shaktikanta Das took over as the Governor of RBI last December.

In five reductions so far in 2019, interest rates have been lowered by a total of 135 basis points over concerns that growth momentum is slowing down and also to try to boost liquidity in the financial system.

GDP growth slowed sharply to a pace of 4.5 per cent in the July-September, hit by a slump in manufacturing output, which contracted by 1.0 per cent. The pace of GDP growth has moderated from the 5 per cent rate in April-June and 7 per cent in July-September quarter of 2018.

Das had previously stated that interest rates will reduce until growth revives and this gives confidence that interest rates may be reduced at the end of the current meeting.

Rumki Majumdar, Economist, Deloitte India said inflation is low and is expected to remain so because of the excess capacity in the economy. "This gives the RBI the elbow room to cut rates, which is highly anticipated in the upcoming December meeting."

In doing so, RBI may look past the recent uptick in inflation last month, largely attributed to vegetables such as onions.