Reserve Bank of India's six-member Monetary Policy Committee (MPC) headed by Governor Urjit Patel will announce the bi-monthly monetary policy on Wednesday. The committee started its two-day deliberations for its monetary policy review on Tuesday.
As per leading economists and macro-economic experts, the RBI is likely to reduce the key lending rates by 25 basis points as the retail inflation has cooled to record low levels in the recent months.
The meeting's outcome on Wednesday is being keenly awaited by all stakeholders, including industry and stock markets. Encouraged by significant price improvement, bankers expect RBI to change its monetary approach and cut benchmark lending rate by at least 0.25 per cent.
Some expect that the central bank may go for an even more aggressive rate cut as the retail inflation touched a historic low of 1.54 per cent in June.
The panel, in its previous bi-monthly review in June, had kept the repo rate at 6.25 per cent for the fourth straight time citing risk to inflation.
"The MPC will meet on August 1 and 2, 2017 for the Third Bi-monthly Monetary Policy Statement for 2017-18. The resolution of the MPC will be placed on the website at 2.30 pm on August 2, 2017," the central bank had said last month.
Commenting on the retail inflation data, Chief Economic Advisor Arvind Subramanian had said the "paradigm shift" in the inflationary process has been missed by all, who have made "systematic inflation forecast error", apparently referring to the RBI.