Change of stance to neutral doesn't mean pause on rate cut: Economists

The change in stance to neutral from accommodative in the June monetary policy meeting does not necessarily signal that the Reserve Bank of India’s (RBI’s) rate setting body — monetary policy committee (MPC) — will go on a prolonged pause on rate cuts going forward, believe experts. 

The MPC, last week, cut the policy repo rate by 50 basis points (bps) to 5.5 per cent, surprising markets, which had largely priced in a more modest reduction of 25 bps. Simultaneously, the RBI announced a staggered 100 bps reduction in the banks’ cash reserve ratio (CRR) requirement, bringing it down to