RBI rate cut: Many economists expect the central bank to ease monetary policy in its June 6 statement
Reserve Bank of India Governor Shaktikanta Das-led Monetary Policy Committee will conclude its three-day bi-monthly meeting on Thursday. While many economists expect the six-member panel to announce a reduction in repo rate, analysts will keenly look out for any steps to prop up growth, after official data put India's GDP growth behind China's in the March quarter. Under its current governor, Mr Das, the central bank has cut the repo rate by 25 basis points each in April and February this year, reversing the two hikes under his predecessor Urjit Patel last year. The two cuts have brought the key interest rate - at which the RBI lends short-term funds to commercial banks - to levels last seen in mid-2018.
Here's a look at the key monetary policy decisions taken in past one year:
| Date | Repo rate | Change (in basis points) | Policy stance | Governor |
|---|---|---|---|---|
| April 4, 2019 | 6.00% | -25 | Neutral | Shaktikanta Das |
| February 7, 2019 | 6.25% | -25 | Neutral | Shaktikanta Das |
| December 5, 2018 | 6.50% | 0 | Calibrated tightening | Urjit Patel |
| October 5, 2018 | 6.50% | 0 | Calibrated tightening | Urjit Patel |
| August 1, 2018 | 6.50% | 25 | Neutral | Urjit Patel |
| June 6, 2018 | 6.25% | 25 | Neutral | Urjit Patel |
| April 5, 2018 | 6.00% | 0 | Neutral | Urjit Patel |
| February 7, 2018 | 6.00% | 0 | Neutral | Urjit Patel |
| December 6, 2017 | 6.00% | 0 | Neutral | Urjit Patel |
| October 4, 2017 | 6.00% | 0 | Neutral | Urjit Patel |
| August 2, 2017 | 6.00% | -25 | Neutral | Urjit Patel |
| June 7, 2017 | 6.25% | 0 | Neutral | Urjit Patel |
| April 6, 2017 | 6.25% | 0 | Neutral | Urjit Patel |
Two-thirds of 66 economists in a poll by news agency Reuters - taken before the government released far worse than expected economic growth numbers - expect the MPC to cut the repo rate by 25 basis points on June 6. If the expectations are met, the repo rate will stand reduced to 5.75 per cent, a level last seen in July 2010 under then governor Duvvuri Subbarao.
Meanwhile, India's GDP or gross domestic product grew 5.8 per cent in the quarter ended March 31, government data showed last week. With that, India lost its position as the fastest-growing major economy of the world to China, which logged a growth of 6.4 per cent in the three-month period. Indian economy logged an average growth of 6.8 per cent for the full financial year 2018-19.
Consumer inflation has remained below the RBI's medium-term goal of 4 per cent for the ninth month in a row. In April, consumer inflation - determined by Consumer Price Index or CPI - picked up to 2.92 per cent from 2.86 per cent the previous month.
The central bank tracks consumer inflation primarily to formulate its monetary policy. Separate data last month showed industrial production contracted 0.1 per cent in March. Gauged by the Index of Industrial Production (IIP), factory output grew 3.6 per cent in the full fiscal year 2018-19.
