MUMBAI (Reuters) – The Reserve Bank of India’s change in monetary policy stance effectively equates to an additional 25-basis-point (bps) rate cut, Governor Shaktikanta Das was reported as saying.
The comments fueled market speculation over whether the central bank is nearing an end to its current rate-cutting cycle, after three moves this year.
Das also said future policy decisions will depend on incoming data, particularly inflation, in an interview with Bloomberg published on Monday.
“We have reduced policy rates by 75 bps and we have shifted to accommodative. And shifting of the stance to accommodative itself means a rate cut of 25 bps at least,” Das was quoted as saying.
A senior trader with a primary dealership said: “It looks like he is saying don’t expect more than a 25 bps cut”, adding that Das seemed more concerned about a lack of transmission of the RBI’s rate cuts so far.
The benchmark 10-year bond yield
While the RBI has cut rates 75 bps since the start of 2019, banks have only eased their key rate by 15-20 bps.
“Given the role the RBI is assigned, inflation is primary target, and given due weightage to the fact that growth momentum has slowed down. For the revival, various stakeholders have to play the role,” Das said.
The RBI’s next policy meeting is on Aug. 7.
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