The RBI has so far taken only piecemeal steps in its response the coronavirus outbreak. But with the virus now spreading rapidly in India and with containment measures set to take an enormous economic toll, we think that monetary policy will be loosened significantly at the upcoming MPC meeting which concludes on Friday 3rd April. A 50bp cut in the repo rate to a record-low 4.65% is likely, and the rarely-adjusted cash reserve ratio may also be trimmed.
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