For yet another fifth time, experts see the apex bank to lower the key policy rate, providing another impetus to the ailing economy that recorded the lowest GDP for the June ended quarter of 5%. The move will complement the government's previous calls of having a flexible liquidity framework in place as well as the highest bail out as corporate tax rate cut.
After its 3-day meeting, the RBI's governor headed MPC meet will announce the outcome on October 4. The current repo rate stands at 5.40%, after the total cut of 110 points so far this year in view of the range bond inflationary levels and growth concerns.
Also, there have been put a mandate for banks to link their lending rate to external benchmarks. Further prior to the meet, the FSDC also took a view of the overall economic situation.
Nonetheless, despite fiscal deficit concerns amid lower tax collection and reduction in GST rate on few of the goods, rate cut seems confirmed to provide fiscal support to spur growth.
Also, the call looks more to be on the cards as the government is left with little room and now most has to come from the central bank.