RBI's surprise repo rate cut: Who said what

The Reserve Bank of India cut on Wednesday cut its repo rate by 25 basis points to 7.5 per cent, in its second move in 2015 outside official policy meetings.

Here's what experts had to say about the surprise cut -

Frederic Neumann, co-head of Asian Economics at HSBC in Singapore:

"Exciting morning! It looks like the RBI feels reassured by the Budget proposals. The Budget is going in the right direction with greater spending on infrastructure, something that the RBI has sought.

With the Budget out of the way the road is clear for a series of rate cuts. It is somewhat surprising that they are doing it off-meeting. Governor Rajan seems to be a friend of surprises.

We expect one more rate cut (this year) but it looks as though the bias is towards more easing. One more is in the bag. The formal adoption of inflation targeting could potentially restrain more aggressive easing later on as the RBI tries to hit its 6 percent target by next January."

Saugata Bhattacharya, chief economist, Axis Bank, Mumbai:

"It looks like the RBI wants monetary policy transmission and by cutting rates offcycle they are trying to push transmission proactively.

The combination of lower inflationary pressures, fiscal consolidation roadmap, rationalisation of expenditure has prompted RBI to cut rates in an offcycle move."

Killol Pandya, senior fund manager, LIC Nomura MF Asset Management, Mumbai:

"Rajan has re-inforced his power to cut rates outside the policy, a second time. I tip my hat to him for that. Rate cut was necessary, we were expecting it to happen sometime this financial year. We were hoping RBI to wait for the inflation data but today's cut has come as a pleasant surprise.

"I feel the April policy will be a non-event from the rate-cut perspective, next on watch will be June policy. Bonds could see a considerable rally post the cut today. Bonds are expected to retrace earlier losses and inch up further."

Rupa Rege Nitsure, group chief economist at L&T Financial Services (To CNBC television):

"This was along expected lines. They had said the next cut is contingent on the quality of fiscal adjustment. And govt has indeed paid attention to the quality of fiscal adjustment

Aggressive rate cuts are not possible in this year because they have already signed the MoU with the RBI on flexible inflation targeting. And inflation is at the mid point level. I feel another 25 bps is possible, maybe in the April policy but after that there will be a pause."

Radhika Rao, economist, DBS, Singapore:

"I think the inter-meeting rate cut is a positive surpirse on timing. By this I think the Reserve Bank of India is expressing its confidence on inflation outlook.

This also means that despite higher fiscal deficit the quality of fiscal consolidation has satisfied central bank's expectations."

A Prasanna, economist, ICICI Securities Primary Dealership, Mumbai:

"It is a surprise. Looks like RBI was happy with Budget but also raises question why RBI did not wait for its scheduled meeting date."

Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance, Mumbai

"The only surprise that I see is that the rate cut is coming immediately after Budget. The quality of the deficit is improving, hence there was scope to cut rates. Domestically macroeconomic data is not giving much comfort and also our rival countries have reduced interest rates.

The reality is growth is yet to pick and it is a right move on the part of the RBI. We still expect another 25 basis points cut in next 3-6 months time. Only caveat is what would happen when Fed starts raising rates."