Growth forecasts were lowered slightly for this year and next when compared to a survey conducted in May. The RBI started a rate cutting cycle in 2015, lowering the policy rate by 175 basis points through October. Real rates“Actual growth is lagging due to demonetisation and high real interest rates,” Abhishek Gupta, economist at Bloomberg Intelligence, said in a report. The RBI needs to cut rates to let growth catch up to the economy’s potential.”But others like Deutsche Bank’s chief India economist, Kaushik Das, says a rate cut won’t accomplish much. “However, expectations of narrowing real rate differentials with the US amid an August cut by the RBI will weigh on debt flows.” Bloomberg

Source: Mint July 12, 2017 12:33 UTC