The Reserve Bank of India (RBI) will announce the monetary policy review on Tuesday, Jun. 2, 2015. It is expected that the RBI Governor Raghuram Rajan will announce reduction in policy rates by 25 bps next week.

Currently, repo and reverse repo rate stood at 7.50% and 6.50% respectively. Reserve ratios, CRR and SLR stood at 4% and 21.5% respectively.

Myiris collated expectations of economists and market experts on RBI monetary policy. The same are listed below 

Dr.Soumya Kanti Ghosh, Chief Economic Advisor, Economic Research Department, SBI:

"The Reserve Bank of India is likely to go for a 25 bp cut sooner than later. Additionally, for better transmission to happen, yields should also decline. This may happen if the government starts spending directly rather than auctioning the cash balances, and that getting indirectly injected into the system. Direct spending always has a larger multiplier impact rather than indirect, money for which may be used for other purposes. Also, with CPI likely to undershoot, there could be a further space for an additional 25 bps monetary accommodation in the remaining part of the year."

Indranil Sen Gupta, India Economist, Bank of America Merrill Lynch:

"We expect Governor Rajan to cut 25bp on June 2, pause to allow markets price in the Fed rate hike expected in September and then cut 50bp in early 2016. After all, inflation is likely well set on to the RBI's under-6% inflation target with global commodity prices stabilizing on Fed tightening and the INR stabilizing with RBI buying FX." 

Pranjul Bhandari, chief India economist, HSBC Securities and Capital Markets (India):

"The mix of slowing inflation and weaker than expected growth point to policy rate cuts. We expect the RBI to cut the repo rate by 25bp in June. But beyond that, room for additional rate cuts depend squarely on structural reforms that the government implements."

Sonal Varma, Economist, Nomura:

"With the RBI's preconditions for further easing having been met, we expect the RBI to cut the repo rate by 25bp to 7.25% in June. Beyond that we expect rates to remain on hold, given our view of stable inflation and an improving growth cycle."

Kapil Gupta and Prateek Parekh, Edelweiss Securities:

"We expect a minimum 25bps rate cut (50bps though more suitable) in the upcoming monetary policy review. Since the last policy meeting in April, inflation prints have been benign despite adverse weather and high frequency growth indicators have remained sluggish. Further, banks have started the process of transmission thereby meeting one of the RBI’s pre-conditions for further policy easing. While the risk of poor monsoon prevails, inflation may not spike given subdued international food prices. Even if food prices rise, historical evidence suggests it reverses in 4-5 months. Given that the current real policy rate is 250bps, there's enough room for more than 25bps easing. Also, monetary easing acts with a substantial lag and hence should be front loaded."

ICRA:

"We expects the Central Bank to reduce the Repo rate by 25 bps in the June 2015 review of monetary policy, following the dip in retail inflation below 5% in April 2015 after a gap of three months and sluggish industrial growth in March 2015. Based on the RBI's view that the real interest rate should be around 150-200 basis points (bps), and our expectation that CPI inflation would average 5.5% in 2015, we anticipate a 50 bps reduction in the Repo rate over the remainder of this calendar year."

Sanjeev Prasad, Kotak Institutional Equities:

"We see scope for a further 25 bps cut on Jun. 2, 2015 and another 25 bps at a stretch if CPI inflation stays below 5.5% in 1QCY16."

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