Will Rbi Trade Inflation For Growth?

Is the time ripe for a repo rate cut? What are the pros and cons of such a move?

Sanjeet K Singh

AVP-Fixed Income Research, I-Sec

Two arguments have been put forth for a repo rate cut by market participants. The first runs thus: the repo rate is artificially keeping the overnight rates high despite the abundant liquidity in the banking system.

This postulate, however, ignores the fact that the repo rate is an instrument for effecting the monetary stance, which, in turn, flows from the Reserve Bank of India