RBI to cut rates by mid-year – Reuters poll


The Reserve Bank of India (RBI) will change its stance to “neutral” and could cut interest rates in June at the latest, according to a Reuters poll of economists. 

A month ago, economists predicted rate hike cycle would begin next quarter. The outlook, however, has flipped following RBI Governor Urjit Patel’s sudden resignation on Dec. 10. 

Key points (Source: Reuters)

  • RBI to keep repo rate on hold at 6.5 percent in Feb, change policy stance to ‘neutral’. 
  • RB to cut repo rate by 25 basis points (bps) by mid-year to 6.25 percent vs the previous forecast of a 25 bps rate hike. 
  • India government 2018/19 fiscal deficit to be 3.5 percent of GDP; slightly higher than the government’s target of 3.3 percent. 
  • Indian economy to grow 7.3 percent in FY 2019/20 vs the previous forecast of 7.6 percent. 
  • Uncertainty around the national election outcome is the biggest risk to the Indian economy. 
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