Demonetisation: RBI most likely to cut repo rate by 25 bps

Services PMI also fell even more sharply to 46.7 in November from October’s 54.5, the first time since June 2015 that the index has gone below the 50 mark that separates growth from contraction. It was also the biggest one-month drop since November 2008, just after the collapse of Lehman Brothers triggered the global financial crisis.

Besides the demonetisation impact, falling inflation too gives comfort to the MPC to cut rates. The CPI inflation in October dropped to a 14-month low at 4.2 percent. With good monsoon rainfall this year, analysts expect the inflation to cool down further, enabling the MPC to signal lower interest rates in the banking system.

(Sourced from agencies, feature image courtesy:oneindia.com)