Will the Repo rate go below 5 Percent ?

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RBI Monetary Policy

Will the Repo rate go below 5 Percent ?

The Retail Inflation, so called Consumer Price Index (CPI) Inflation stood at 3.21 Percent in the month of August 2019. This is up from 3.15 Percent in July and 3.18 percent in the same August last year.

However it did not reach the expected level of 3.30 Percent by the Analysts. At the same time, the retail inflation is also below RBI’s medium term Target of 4 Percent. It is noteworthy over the past one year, India’s Retail Inflation has not exceeded the said 4 Percent.

The Inflation rose in August 2019 is due to Food Prices like Meat and Fish, Vegetables and Pulses. Prices of Oil, Fat and Milk products have also increased marginally.

Fruits and Sugar products are declined in the last month. Rural Inflation was 2.18 Percent and Urban Inflation was at 4.49 Percent Provisionally in the month of August 2019.

India’s CPI Inflation has averaged about 6.2 Percent Since the year of 2012. It was seen as 12.17 Percent which is the highest in November, 2013 and the lowest in June 2017 were 1.54 Percent on Retail Inflation.

Analysts say the Country’s Inflation was lower than the Reserve Bank of India’s Medium term target, which could lead to another rate cut in the Repo Rate in October 2019. Over the last few months, the CPI Retail inflation is at low has been a Positive Factor in times of Economy Slowdown.

It seems likely there is a Repo rate cut about 50bps in the Upcoming Monetary Policy Committee which will be held in the first week of October 2019. According to RBI Website, the current Repo rate is 5.40 Percent, Reverse Repo rate is at 5.15 Percent and the Bank Rate is stated at 5.65 Percent. So the Repo rate could go below 5 Percent in the coming Month.

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