All eyes will be on the Reserve Bank of India (RBI) today as the monetary policy committee (MPC), led by RBI governor Shaktikanta Das, will conclude its three-day meet and announce its decision on policy rates. For those waiting curiously, the official document will be available on the RBI website at 11.45 am on Thursday, June 6.
RBI’s top management will then interact with the media in Mumbai for further clarity on the MPC’s resolution under the second bi-monthly monetary policy statement for 2019-20. The interaction will be held from 12 noon to 12.45 pm and will also be live webcast on rbi.org.in. Apart from discussions on policy rate decision, it would be interesting to hear to RBI’s take on the current economic slowdown India is facing.
The day doesn’t end here for the central bank. RBI’s top management will then interact with researchers/analysts through teleconference between 3 pm and 3:45 pm on Thursday .
The market is widely expecting a 25 basis points cut in repo rate, along with a change in policy stance to ‘accommodative’ from ‘neutral’ after the gross domestic product (GDP) grew at a tepid rate of 5.8% during the fourth quarter of 2018-19.
Currently, the policy repo rate is at 6%, while retail inflation stood at 2.92% in April. RBI’s MPC has so far reduced the repo rate by a cumulative 50 bps since the start of 2019 while maintaining a neutral stance.
Internationally, Australia also cut interest rates on Tuesday for the first time in three years. US Federal Reserve Chairman Jerome Powell also signalled an openness to loosening if necessary.
Former treasury secretary Lawrence Summers wrote on Twitter that the Fed should cut by 50 basis points over coming months, if not more, to ward off recession risks.
On Tuesday, the World Bank lowered its 2019 growth forecast citing a slowdown in trade growth to the weakest since the financial crisis. World Bank said global real GDP growth will be 2.6% for 2019, which is 0.3 percentage point lower than its previous forecast in January. India’s growth forecasts are projected to be 7.5% per annum in 2019, 2020 and 2021 — not having been downgraded from their January estimates.