Expert views: RBI cuts repo rate to more than 6-1/2 year low

REUTERS - The Reserve Bank of India cut its policy rate on Wednesday by 25 basis points to 6 percent, the lowest since November 2010, as slumping inflation allowed the central bank to focus on boosting an economy growing at the slowest pace in over two years.

Four members of the monetary policy committee voted to cut rates by 25 bps, while one voted for a 50 bps cut and one voted for leaving rates unchanged.

COMMENTS

YOGESH NAGAONKAR, FUND MANAGER, BONANZA PMS, MUMBAI

"The market was optimistic about a cut and a 25 basis point cut is on expected lines and I am expecting two more cuts of 25 basis points each this year. The U.S. Federal Reserve's plans on bringing down its balance sheet will not have any impact on the Reserve Bank of India's future stance."

HITESH JAIN, SENIOR RESEARCH ANALYST AT IIFL WEALTH & ASSET MANAGEMENT, MUMBAI

"The RBI was hard pressed to cut given the sharp fall in inflation. I don't think there will be further rate cuts as far as this calendar year is concerned as they are clearly reiterating the offside risk to inflation."

"Given the prevalent inflation rate, there is room to cut, but they are clearly stating that they are not sure how the inflation trajectory will evolve in the next quarter or two."

ANITA GANDHI, WHOLE TIME DIRECTOR, ARIHANT CAPITAL, MUMBAI

"Economic data suggests that the manufacturing slowdown is immense and it has affected Q4 FY17 GDP. The current level of inflation is at comfortable levels and leaves room for further rate cuts."

"If RBI gets confirmation that inflation will remain in the lower territory, there is a possibility of a further rate cut."

"Economic growth has come down substantially, and from that perspective, further stimulus is required for the economy in terms of reduction in the interest rate."

RAJNI THAKUR, ECONOMIST, RBL BANK, MUMBAI

"We look at the policy rate cut as a knee-jerk reaction to the current growth-inflation dynamics. Central Bank has used the policy space opened up by continued decline in inflationary pressures, reduction in global oil prices and appreciating currency."

(Reporting by Bengaluru Newsroom; Editing by Euan Rocha)