The Reserve Bank of India is expected to retain a dovish bias going forward and its emphasis may switch towards ensuring that the aggressive rate cut this year gets transmitted to commercial lending rates, says a report.
After five consecutive cuts in interest rates this year, the six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted to hold the key repo rate at 5.15 per cent and reverse repo rate at 4.90 per cent.
“We think that the RBI will retain a dovish bias, but the emphasis may now switch towards ensuring that the aggressive rate cuts this year (cumulative 135bps) gets transmitted to commercial lending rates,” Singapore's DBS banking Group said in a research note.
The RBI reiterated that it would maintain an accommodative stance as long as necessary to revive economic growth but cut its GDP growth forecast to 5 per cent for the 2019-20 fiscal from the earlier estimate of 6.1 per cent.
