Monetary policy: RBI may go for another 25 bps cut in Aug, says expert

As far as future rate cuts are concerned, we expect one more 25 basis points rate cut in this cycle

The Reserve Bank of India has cut the repo rate by 25 basis points while maintaining a neutral stance, in line with our expectations. Some market participants had expected the RBI to change the neutral stance to accommodative in the current policy, or deliver a 50 basis points rate cut in one go, but the central bank did the right thing, in our view, by not being overly dovish.
 
Given the near-term undershoot in CPI inflation, the RBI reduced its inflation forecast once again. FY20 growth forecast was also revised down to 7.2 per cent from 7.4 per cent.