"The Reserve Bank of India could deliver fireworks in its monetary policy meeting on Tuesday by cutting the repo rate by 25 basis points to 7 per cent," it said in a report, 'Asia Spotlight: More Rate Cuts in India'.
    
Moody's Analytics is a division of Moody's Corporation and is engaged in economic research and analysis. It said dim forecasts of below-average rains have not come to fruition and rainfalls have been closer to the long-term average with encouraging signs for kharif crop sowing.
     
"There have been double-digit increases in areas sown compared with the last year for major kharif crops. And although the monsoon season is not over yet, we believe RBI has an opportunity to stay ahead of the curve and cut rates because better food supply will likely cap inflation," Moody's Analytics said.
     
Monsoon rainfall has picked up in July and the pace is likely to continue in August. The Met department had in June projected a deficient monsoon this year. The research firm also said recent global developments also suggest limits to inflation pressure, with the tumbling of global commodity prices, particularly crude oil, on the back of the Iran nuclear deal.
 
RBI Governor Raghuram Rajan had in June said the future trajectory of the monetary policy will depend on monsoon, the way the government manages shocks, if any, emanating from it and crude prices. RBI has cut rate by 0.75 percent in January-June.
     
RBI is scheduled to announce its third bi-monthly policy review tomorrow. The industry has been pitching for a rate cut to ease the cost of capital.

 

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