The six-member monetary policy
committee might cut rates in the Reserve Bank of India’s (RBI’s) monetary policy
review to be announced on Wednesday. The members, including RBI
Governor Urjit Patel
and Deputy Governor Viral Acharya, are deliberating on a host of issues before taking a call on rates. The following set of data, which shows slowing credit growth as well as a ultra-low inflation on the back of falling growth, would be discussed minutely. In the past, the members have cited stickiness in core inflation as reasons behind holding rates. Core inflation has shown some moderation, but the headline inflation has fallen sharply. Since the policy is data driven, economists argue that a case for cutting rate is strong. While the repo rate is currently at 6.25 per cent, most economists expect the rate to be down at 5.75 per cent by the end of the calendar year. Anup Roy
presents the macro picture.