The three day meeting of the monetary policy committee (MPC) began on Tuesday amid expectations of a third straight rate cut of 25 basis points.
The key lending rate or the repo rate currently stands at 6 percent. it is believed that RBI has enough room to cut rates further as inflation has remained below the RBI’s medium-term goal at 4 per cent.
The CPI inflation for April 2019 stood at 2.92 percent. The rate cut is also likely to revive the economy that is going through a slowdown.
The only constraining factor for the apex bank could be the unwillingness of banks to pass on the rate cut benefits to customers.