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Rate Cut Shows RBI's Concern About Growth, Say Experts

The RBI maintained its "accommodative" stance but said further rate reductions would depend on the level of inflation.

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Rate Cut Shows RBI's Concern About Growth, Say Experts
BENGALURU/MUMBAI: 

The Reserve Bank of India (RBI) cut interest rates by 35 basis points on Wednesday, slightly above expectations, and its fourth cut in 2019 to boost an economy growing at its slowest pace in nearly five years. The RBI maintained its "accommodative" stance but said further rate reductions would depend on the level of inflation.

COMMENTARY

RUPA REGE NITSURE, CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI

"The RBI has done the maximum that a central bank can do in the current phase of economic slowdown."

"By significantly revising downwards the GDP growth for H1, FY20, it has signalled the concerns on the growth front. However, the weight of structural factors has increased in India's ongoing slowdown and it is now absolutely essential for the central and state governments to work in partnership to resolve some of the sticky sector-specific issues and concerns."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI

"Welcome the 35 bp rate cut. Growth is likely to be revised down further from 6.9%. Given the well-anchored inflation, we believe that the RBI is set to cut rates in the next policy review in October. It could be 15/20 bps also. It is clear that reviving growth has received most attention."

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI

"The 35 bp rate cut is higher than the consensus and our expectation of a 25 bp rate cut. This clearly shows the RBI's concern about growth performance and outlook, and the urgency to take measures to revive growth."



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