As central banks across the world step up measures to fight global recession after the outbreak of the coronavirus pandemic, the Reserve Bank of India (RBI) on Monday, too, announced that governor Shaktikanta Das will be holding a press conference at 4 pm later in the day.
Market experts are sensing a strong possibility of an off-cycle rate cut after the US Federal Reserve on Sunday reduced its benchmark interest rate to zero and launched a massive quantitative easing programme in an emergency move.
Soumya Kanti Ghosh, group chief economic advisor at State Bank of Indi (SBI), told CNBC-TV18: “You can see some liquidity measures coming through very soon and the fact is that the situation on the ground is deteriorating fast.”
“My sense is that there is an outside chance of the RBI moving before the Monetary Policy Committee (MPC) policy. I am not sure whether they will go with a rate cut or liquidity auctions, but to me there is now an outside chance of the central bank moving because situations are deteriorating every passing day. So that cannot be ruled out fully,” he added.
Bank of America Securities also believed that RBI may go for a rate cut before the next scheduled policy review on 3 April and is likely to slash rates by 0.75 percentage point in 2020 as inflation ebbs.
Central banks worldwide have been cutting rates and injecting liquidity to counter economic slowdown. The Bank of Japan on Monday eased monetary policy further by ramping up purchases of exchange-traded funds (ETFs) and other risky assets to combat the widening economic fallout from the coronavirus epidemic. South Korea Central Bank also cut its base rate by 50 bps to 0.75%.
Meanwhile, data on Monday showed that the February WPI (wholesale price index)-based inflation fell to 2.26% versus 3.1% a month ago. Food inflation stood at 7.31% versus 10.12% and primary articles inflation was 6.71% versus 10.01% in the previous month.
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