Monetary Policy: India Inc hopeful that Reserve Bank's Rajan will cut key rates

Raguram Rajan, governor, Reserve Bank of India is going to announce the bi­monthly monetary policy this June 2.

Prior to that banks and various financial organisations have started predicting Raghuram Rajan's move.

It is anticipated that he will cut rates this time unlike the last time when he surprised everybody by keeping the rates unchanged.

The CitiGroup said that RBI is likely to cut rates by 0.25% in its upcoming policy review on June 2.

“We expect RBI to resume its easing cycle in the June 2 policy with a 25 basis points cut,” said CitiGroup.

Assocham has estimated that RBI may cut interest rate by another 0.50% in the next two quarters post June 2 policy review.

D S Rawat, Secretary General, Assocham said, “We anticipate a 50 bps reduction in the repo rate over the remainder of this calender year, while 25 bps should be announced right away.”

According to a poll by Reuters, RBI will cut interest rate by 25 bps to 7.25% on June 2.

As per the survey, 38 out of 48 economists expect RBI to cut the repo rate at the June 2 review, out of which 35 of them are anticipating a cut by 25 bps.

Where people and organisations are expecting rate cuts, Raghuram Rajan needs to keep lot of things in mind, such as inflation, loan growth, unseasonal rainfall and take a wise decision.

(With agencies)