RBI Monetary Policy: Potential For Two More Rate Cuts, Says Keki Mistry

There could be two more rate cuts ahead, depending on good monsoon and better domestic growth pickup, said HDFC Bank's Keki Mistry. This comes as the Reserve Bank of India Monetary Policy Committee cut the benchmark repo rate by 25 basis point to 6.25% on Friday.

“Don’t think the governor seems too worried about inflation...Could see two more rate cuts if we see good monsoons," said Mistry, additional non-executive director of the bank.

There will now be a growth pick up in the system, he said, expressing optimism about the policy’s impact on economic growth.

The Reserve Bank of India’s Monetary Policy Committee on Friday reduced the benchmark lending rate, marking the first rate cut in five years. This move aims to boost sluggish economic growth, supported by easing inflation expectations.

“I think it was completely along expected lines, given the global economic uncertainty, trade wars going on and all of that," Mistry said on the move.

The stance remains unchanged and a quarter percent reduction in interest rate will help boost growth further, coupled with the fact that existing home loan customers will get the benefit of the 25 bps cut in rates, he said.

Addressing the growth outlook, Mistry remarked, “I think there will be a recovery…we may see a pickup in growth beyond RBI’s 6.7% forecast, obviously depending upon good monsoon and macroeconomic environment in the rest of the world not getting completely beaten down.”

In terms of global growth worries, India is expected to be least affected by the volatility and continue to show resilience as uncertainties loom, Mistry said.

“Globally we are living in a world of complete uncertainties, no one knows what will happen...But, India will be least affected compared to all other countries, simply because the domestic economy is very strong. The measures taken in terms of giving money in the hands of people will push consumption, so if consumption picks up, then it will create more capacity...more investment."