Reserve bank of india may do the expected, cut policy rate by 25 bps

Borrowers can look forward to cheaper loans as most bankers expect the RBI, backed by the newly formed Monetary Policy Committee (MPC), may to cut the policy rate by 25 basis points in its bi-monthly credit policy on Tuesday .   A majority , 14 of the 18 banks and financial institutions polled by ET, expects the central bank to cut the policy rate, while the rest feel the rates may remain unchanged as the country steps into the league of developed nations by having a panel to decide policy rates.   Retail inflation, a key factor the central bank considers in deciding its policy rates, was at 5.05% in August, the lowest in six months.   More than a month ago, India had adopted an inflation target of around 4% in the next five years.The consumer inflation target for RBI until March 31, 2021, is fixed with an upper tolerance level of 6% and lower limit of 2%.   Tuesday's monetary policy will be the first under the new monetary policy decision process, which conforms to global standards. The MPC consisting of six members, including new RBI governor Urjit Patel, will debate to decide on the rate action. If the panel decision is split, then the governor will have a casting vote to take the final call.  

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