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To cut rate or not?

To cut rate or not?
Anup Roy
Last Updated : Sep 14 2016 | 2:14 AM IST
The Reserve Bank of India (RBI)'s fourth monetary review, under Governor Urjit Patel, is scheduled next month. Will it cut rate, or won't it?

Reasons against

Inflation: A sharp decline in retail inflation in August might not allay fears

FCNR (B) deposit maturity: Sep-Nov. If FCNR outflow adds up with general outflow after rate cut, it would be disastrous

US elections: In November. Has ramifications for global economy that RBI needs to account for

7th Pay panel award: Could lead to spike in inflation

Reasons in favour

Inflation: Fall is sharper than expected
IIP numbers: Depressing contraction would make the industry lobby, and finance ministry, push for a rate cut
Correct timing: Waiting for next policy in December could be bad timing, with uncertainties over US Fed
Reserve's impending decision

Source: Bloomberg

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First Published: Sep 14 2016 | 12:12 AM IST

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