After the recent big bang tax rebate announced in the Interim Budget 2019 by Finance Minister Piyush Goyal, it is widely being speculated that in the upcoming bi-monetary policy review meet, the RBI may look to bring down repo rate. In its December meet, the central bank maintained a 'calibrated tightening' policy stance, while at the same time hinted that a rate cut call can be taken provided there is no upside risks to inflation.
In the previous two MPC meets, the RBI maintained status quo on key policy rates.
Repo rate is the rate at which the RBI lends to commercial banks and cut in repo rate allows banks to reduce lending rates for its customers, which thus translates to lower EMIs in case of personal loan, car loan, home loan etc.
Nonetheless, if experts are to be believed, the centre might not bring about rate cut in the upcoming RBI meet.
Sameer Narang Chief Economist, Bank of Baroda as quoted in the PTI report says, "Given the significant undershoot and now the narrative of a global slowdown, CPI inflation is expected to remain below the RBI's target of 4 per cent in 2018-19. This gives RBI a room to change its monetary policy stance. However, the elevated level of core components such as health, education, household and personal goods suggests that room to cut rates is limited for now."
He is of the view that on February 7, the central bank may change its monetary stance to 'neutral'.
Another expert, Sanjay Chamria, Vice Chairman and Managing Director of Magma Fincorp: He is of the view that Interim budget 2019 speech has "set the stage for rate cut by RBI."