Coronavirus has hit global economies hard and central banks across the world are trying to combat it. The US Federal Reserve cut rates to zero and launched a massive $700 billion quantitative easing program early on Monday morning. Bank of Japan has followed suit by easing monetary policy further by ramping up purchases of exchange-traded funds (ETFs) and other risky assets.

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The Reserve Bank of India has also announced a press conference at 4:00 pm today which will be addressed by Governor Shaktikanta Das. The calculated guess is that a rate action might be announced.

Speaking to CNBC-TV18's Latha Venkatesh, Ananth Narayan, Professor at SPJIMR voiced that he expects the Indian central bank to cut rates by 50 bps.

“Governor Das has always been concerned about growth and financial stability, and this is well before the virus issue came up and well before the whole world started easing the monetary and fiscal tap. So, I can only think the events of the last few days have strengthened his resolve even further. I would expect therefore a strong possibility of an off-cycle rate cut as well as other measures, maybe an extension of the long term refinancing operation (LTRO) program that he announced on February 6 last month,” he said.

He further added, “I would also think some measures to extend the LTRO or essentially bring down the yields across the yield curve, not just for the overnight rate. So, maybe the 1 lakh crore LTRO could be extended by another 1 lakh crore and maybe they could think about even extending the tenure from 3 years to 5 years.”

A Prasanna of ICICI-Securities Primary Dealership too expects the RBI to take some rate action. “The RBI Act says that they can have this meeting out of turn and also they can inform the market as soon as it is applicable. So, technically I think the governor can come at 4:00 pm and say they have had a meeting and they have taken the following decisions. I think that would be fully in keeping with the RBI Act. So, I would expect some rate action and any liquidity steps,” he said.

Prasanna also expects RBI to give some assurance in terms of making sure the market continues to function smoothly.

“We have to realise that at some point potentially the coronavirus impact can become serious in India, in Mumbai for example in the financial capital and the markets have to continue functioning. So, the RBI has a big role to play in that. So, I would expect the governor to also provide some assurance or whatever steps RBI intends to take to ensure that the financial system continues to function in an orderly way,” he said.

First Published:Mar 16, 2020 1:48 PM IST