GDP growth at 5 quarter low: RBI rate cut on cards? Here’s what analysts say

By: | Published: March 1, 2019 1:44 PM

As economy eased in the quarter ending December of FY19 on account of weak domestic demand, Reserve Bank of India (RBI) may ease monetary policy to tackle a sharper slowdown ahead, analysts said.

Low inflation and weak growth may push the central bank for additional easing in the April monetary policy, Kotak Economic Research said.

As economy eased in the quarter ending December of FY19 on account of weak domestic demand, Reserve Bank of India (RBI) may ease monetary policy to tackle a sharper slowdown ahead, analysts said.

Low inflation and weak growth may push the central bank for additional easing in the April monetary policy, Kotak Economic Research said. “While we have already penciled in a 25 bps of rate cut in April, if growth momentum moderates further, we do not rule out an additional 25 bps cut later in the year in addition to our base case of 50 bps cut in CY2019,” it added.

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RBI may come up with another 25 bps rate cut next month, Nomura also said.  “On monetary policy, with low food prices keeping the RBI’s inflation projection for end-2019 below 4 percent and growth prospects dull,” it added.

The gross domestic product (GDP) grew by 6.6 percent in the October-December quarter, lower than the 6.8 percent projected by analysts. The slowdown in 3QFY19 GDP growth came on account of moderation in both private and government consumption.

Meanwhile, the next meeting of the RBI is scheduled from April 2 to 4. The The MPC voted for a 25 basis point cut in the benchmark policy rate at its policy meeting on February 7. Four members voted in favour of the rate cut and two against as headline inflation at 2.2 per cent was at an 18-month low, below the target of plus or minus 4 per cent.

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