The Reserve Bank of India (RBI) is expected to cut rates for the second consecutive time, with retail inflation continuing to remain low and domestic economy showing muted growth prospects.

Share Market Live

NSE

All the respondents to CNBC-TV18's poll expect a 25 basis points rate cut from the monetary policy committee in its first bi-monthly policy. One basis point is a hundredth of a percentage point.

60 percent of the respondents expect that, including the April policy, the RBI will cut repo rate by 50 basis points through the calendar year while a handful expects 75 basis points cut from the central bank during the year.

On the growth front, the respondents largely expect the projections to be lowered. This is expected as high-frequency indicators continue to point towards a cyclical slowdown, and lower private consumption is likely to keep growth muted. 73 percent expect the 7.3 percent forecast for Q3FY20 and the 7.2-7.4 percent range for the first half of FY20 to be lowered.

Retail inflation continues to remain below 4 percent targetted by the RBI. It was 2.57 percent in February. However, the expectation is that inflation projections may not be lowered just yet, especially with monsoons round the corner which could significantly impact the food prices.

Therefore, 60 percent of the respondents expect the 3.2-3.4 percent projection for CPI inflation for the first half of FY20 to be left unchanged, and 80 percent expect the Q3 forecast also to be left unchanged.

The stance of the RBI is also expected to be maintained in 'neutral' mode and the tone could be similar to more dovish from the last policy given the growth-inflation dynamics.

First Published:Apr 2, 2019 10:32 PM IST