RBI will begin cutting the repo rate in April

The Reserve Bank of India’s (RBI’s) decision to keep the repo rate unchanged at 6.50% today highlights its unease at the current rate of headline inflation. Admittedly, the lowering of the cash reserve ratio does show that it is turning more concerned about the growth outlook. But we doubt that the MPC will feel comfortable cutting the repo rate until its April meeting, when inflation should be closer to the 4% target.

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