While inflation is unlikely to decline significantly from the current stage, the Reserve Bank is at the end of its rate-cut period, and the pressure of economic growth has now transferred to the government. With no rate cuts on the table, the other monetary policy solution may be to the the asymmetric policy corridor diameter or raise the pace of reverse repo when the pandemic subsides. “We now conclude that we are at the peak of the rate-cut process and hopes of major rate cuts must be stabilized as inflation is unlikely to decline significantly from the current stage,” said the SBI economists, indicating that there could be a 0.25 percent higher rate cuts in the offering at most.
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