RBI's Fifth Policy Statement Of 2019-20 Due Today. Here's What To Expect

The Reserve Bank of India has already emerged the most aggressive central bank in Asia

The repo rate - which is the key interest rate at which the RBI lends short-term funds to commercial banks - currently stands at 5.15 per cent, the lowest level recorded since 2010.
A poll of 70 economists by news agency Reuters predicted the RBI would cut its repo rate by 25 basis points to 4.9 per cent on Thursday. That will be followed by another rate cut, of 15 bps, in the second quarter of 2020, where the repo rate will stay at least until 2021, they add.
The economy is expanding well below the rate needed to generate enough jobs for the millions of young Indians entering the labour market each month.
The Reserve Bank of India has already emerged the most aggressive central bank in Asia, and a further reduction of 25 basis points (0.25 percentage point) will mark the most downward revisions in a calendar year in India since 2009.
Economists expect the Monetary Policy Committee to continue to ease the monetary policy as the latest GDP data refuelled concerns about continuing economic slowdown.
"Rising inflation and falling economic growth engulfed the fear of stagflation recently and the MPC is caught between a rock and a hard place in deciding the policy rate... the economy demands further ease in monetary policy, though the signs of inflationary expectations intensified," said Brickwork Ratings in a note.
Some economists also expect the RBI to lower its economic growth forecast for the financial year ending March 2020.
"The policy backdrop for the December MPC meeting will be the steady decline in the GDP growth trajectory and the increase in headline CPI inflation led by food prices," said Suvodeep Rakshit, vice president and senior economist, Kotak Institutional Equities.
In October, the RBI lowered its growth projection for 2019-20 to 6.1 per cent from 6.9 per cent, with Governor Mr Das assuring the accommodative stance till growth is revived.
"The MPC will need to revise lower its FY2020 GDP estimate even as it possibly revises up the near-term inflation outlook," Mr Rakshit added.