Dec 5 (Reuters) - The Reserve Bank of India (RBI) cut its key repo rate by 25 basis points on Friday, in line with a consensus view, as record low retail inflation and a benign outlook for prices provided
ample room to further support economic growth.
The monetary policy committee has now cut the repo rate by a total of 125 basis points since February to 5.25%. It held rates in August and October.
COMMENTARY:
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
"As we expected, the RBI delivered a rate cut recognising the impending risks to growth and utilising the monetary space yielded by low inflation."
"The central bank aptly took a forward-looking view on growth and inflation as the latter is expected to remain below 4% up till the second quarter of FY27."
"We keep our forecasts unchanged, projecting GDP growth at 7.3% for FY26 and inflation at 2%. For FY27, we expect GDP growth at 6.5% and inflation at 4%."
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
"Surprisingly lower inflation prompted the RBI to announce a 25-bps rate cut, as widely expected, given its outlook for markedly slower growth during the second half of FY26."
"Adding to this are concerns over the external sector, lack of visibility around the Indo-US trade deal, and multiple high-frequency indicators already signaling a slowdown in activity despite the prevailing narrative of a demand surge following the GST rate cut."
"These factors suggest the possibility of an additional rate cut going forward."
MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI
"With inflation persistently undershooting, the RBI found it harder to ignore its core mandate of inflation management and decided to cut by 25bps."
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
"The RBI delivered on most fronts on Friday, lowering rates along our expectations and taking pro-liquidity steps, as well as moves to prevent re-hardening in borrowing costs."
"The policy decision was likely dictated by a higher weightage to below-target inflation, which had provided a sizeable real rate buffer."
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
"We believe that there would be scope for another 25 bps cut this cycle as inflation is expected to remain benign, and despite high real GDP print, there are no signs of over-heating in the economy."
TERESA JOHN, LEAD ECONOMIST, NIRMAL BANG, MUMBAI
"The 25bps rate cut, along with liquidity measures, will help keep bond yields in check and help sustain the momentum in the economy."
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"The repo rate cut, along with liquidity easing measures, announced by the RBI is exactly in line with our expectations."
"With RBI continuing to leave room open for further easing, we do not rule out another 25bps cut, with the likely terminal rate at 5% followed by a prolonged pause."
(Reporting by Manvi Pant, Ananta Agarwal, Meenakshi Maidas Kashish Tandon, Nishit Navin, Hritam Mukherjee and Anuran Sadhu in Bengaluru; compiled by Dhanya Skariachan, Editing by Harikrishnan Nair)
