RBI monetary policy: As economic contraction looms, majority see rate pause

Contracting economy, rising bond supply, inching up of long-term rates reduce prospects of successive rate cuts

Opinions are divided about the course of action the Reserve Bank of India (RBI) could possibly take in the upcoming monetary policy review. This is because a contracting economy due to coronavirus (Covid-19) along with lockdowns, rising bond supply and inching up of long-term rates reduce the marginal efficacy of successive rate cuts.

A Business Standard poll of 10 economists and bond market participants does not come to a conclusion as to whether the RBI would cut rates or exercise a pause. There are some expectations of a cut on the reverse repo side and there may be further liquidity