The Reserve Bank of India (RBI) is expected to leave the policy rate unchanged at 7.5% at its 7 April policy meeting, based on its statement after the inter-meeting rate cut in March. The central bank is unlikely to have gathered new information on the long list of preconditions it set in March for further rate cuts. It may consider measures to improve monetary policy transmission. “Given the expectation of average CPI inflation of 5.4% in FY16 (starting 1 April 2015) and assuming the RBI is comfortable with real policy rates at 150-200bps, we see scope for another 25-50bps of rate cuts this fiscal year”, says Standard Chartered. Consecutive inter-meeting rate cuts in January and March have made it difficult to forecast the exact timing of the next rate decision, however.
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