Bankers expect RBI to cut lending rate by at least 0.25%

Major indices in the market have been trading without any fizz, in anticipation of the RBI’s bi-montly monetary policy committee’s outcome.
 
Following are expectations for the RBI’s monetary policy decision:
 
Bankers expect the RBI to change its monetary stance and cut benchmark lending rate by at least 0.25% due to significant price improvement
 
Some expect that the central bank may go for an even more aggressive rate cut as retail inflation touched a historic low of 1.54% in June.
 
Ravindra Dholakia, one of the MPC members, however, had advocated a 50-basis point cut in the repo rate, saying several noteworthy developments recently on prices and output fronts warrant a decisive policy action.
 
We expect the MPC to cut repo rate by 25 bps in the August meeting. However, we reckon that room for further monetary accommodation remains limited due to rising real rural wages, mean reversion of food prices, adverse base effect and onset of global financial tightening.