India: Tuesday rate cut on the cards | beyondbrics

The Reserve Bank of India is widely expected to cut interest rates on Tuesday.

But by how much, nobody knows. Will the rate be reduced by 25 or 50 basis points? And contrarian analysts are even wondering whether loosening monetary policy is a good idea right now.

The ‘repo rate’ – the interest rate at which India’s central bank lends to banks – has been steady at 8 per cent since April. But the RBI is now expected to loosen monetary policy, complementing the government’s economy-boosting actions in liberalising policy towards foreign investors in September and cutting back expensive diesel subsidies, to reduce the fiscal deficit.
India: Tuesday rate cut on the cards | beyondbrics