Aditi Nayar, Chief Economist at ICRA, expects the Reserve Bank of India’s (RBI) rate cut cycle to be shallow, with the Monetary Policy Committee (MPC) likely to reduce rates by another 25 basis points.“Will it come in April, or will it get a bit more delayed beyond that? All the information we receive over the next two months—both on domestic growth and inflation, as well as global policy changes—will have a big bearing on what the MPC decides in April,” she said.Nayar also pointed out the possibility of liquidity tightness in March due to advance tax collections and seasonal increases in currency demand. However, she clarified that this would be a short-term issue rather than a long-term concern.
She added that while the RBI may introduce short-term liquidity management measures in March, she does not see a need for a cash reserve ratio (CRR) cut.Also Read: RBI cuts growth forecast for two quarters, factoring in a weak rupeeOn the rupee’s movement, Nayar acknowledged its volatility, noting that global uncertainties make it difficult to predict future policy decisions. She highlighted the MPC’s assumption of the rupee at 87 per US dollar as an indication of ongoing currency fluctuations.For more details, watch the accompanying video(Edited by : Sheersh Kapoor)
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