RBI likely to cut interest rate by 25 bps in June

Apex Industry body ASSOCHAM today said it expects the RBI to cut policy interest rates by 25 basis points in its June 2 policy and another 50 bps in the subsequent two quarters since the retail inflation is hovering at levels,  much below  foreseen by the central bank itself and the industry needs a demand trigger for a revival.  

In a note submitted to the Governor of Reserve Bank of India (RBI) Dr Raghuram Rajan, ASSOCHAM Secretary General D S Rawat said, the Consumer Price Index (CPI) is expected to be in a range of 4.5-6.0% over the remainder of 2015. Based on the RBI’s view, the real interest rate should be around 150-200 bps.

“Thus, we anticipate a 50 bps reduction in the repo rate over the remainder of this calendar year, while 25 bps should be announced right away".