RBI likely to cut rates by 25bps in Aug

RBI likely to cut rates by 25bps in Aug

RBI policy rate cut is likely to boost investments.

The Dollar Business Bureau

The Reserve Bank of India is expected to cut key rates by 25 basis points in a policy review meeting, which is scheduled on August 9.

The rate cut owes to benign inflation, low IIP growth and monsoon forecast, claims a report.

According to the largest global financial service provider, Bank of America- Merrill Lynch (BofA-ML), easing of 25 basis points is expected as CPI inflation stands below the expected 4.8% for March while in February the IIP rose to a mere 2%.

Earlier in April, RBI lowered its policy rate to 6.5%- the lowest rate in past five years. While that was the first rate cut after a gap of 6 months, RBI reduced its rate by an aggregate of 1.5% since January 2016. Subsequent rate cuts from RBI are expected to boost investments in the industry.

Ideally CPI should stand at around 5% in FY17, excluding  the rise in inflation due to hike in oil prices from a lower point or due to a hike in housing costs as a result of the policies announced by the Govt in its 7th pay commission.

The Dollar Business Bureau - Apr 18, 2016 12:00 IST