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RBI to cut rates on falling inflation, declining crude oil prices: S&P

The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7

Press Trust of India  |  New Delhi 

Reserve Bank of India | File Photo
Reserve Bank of India | File Photo

and declining prices have created space for the to cut interest rates, said Tuesday.

The is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. It would be the first Monetary Policy Committee meeting under Governor Shaktikanta Das, who took charge in December 2018 following sudden exit of Urjit Patel.

Economist Vishrut Rana said inflation remains under control and near the low end of the target band, following strong food output, and easing crude oil prices, that have fallen about 20 per cent from their October highs.

"These two factors mean that the has some policy space to move its interest rate settings downward at least in the near term," Rana told PTI.

In its December monetary policy review, the had kept interest rates unchanged but held out a promise to cut them if the upside risks to the inflation do not materialise.

Continued decline in food and fuel prices pulled down retail inflation to an 18-month low of 2.19 per cent and WPI inflation to a 8-month low of 3.80 per cent in December 2018.

The government has mandated the RBI to contain retail (CPI) inflation at 4 per cent (+/- 2 per cent).

Brent crude which had breached USD 80 a barrel mark is now hovering around USD 63 a barrel.

First Published: Tue, February 05 2019. 12:55 IST
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