Analysts expect the RBI to go for an out-of-turn rate cut — earlier than the scheduled meeting of its monetary policy committee next month — to prop up the economy, hit by the coronavirus, with falling inflation providing it a ballast to cut the rates.

A fall in crude oil prices, which is expected to have a positive rub-off on inflation, and lower retail inflation for February have added to the optimism of an impending cut from the central bank.

“While we are expecting a 25-50 basis point cut in the repo rate, the key question is only if it will happen in the April policy meeting or whether the RBI will take a pro-active step and go for an inter-meeting policy cut in the next few days,” an analyst said.

The MPC is scheduled to meet between March 31 and April 2.

Data released by the government on Thursday showed CPI inflation declining sharply to 6.58 per cent in February from a 68-month high of 7.59 per cent in the previous month.

A note from the economic research wing of SBI said inflation was expected to slide below 6 per cent in March 2020 and is likely to be close to 5 per cent in August.

The six-member monetary policy committee (MPC) had in its previous meeting in February left the repo rates unchanged because of concerns over inflation.

A report from a foreign brokerage said with a heightened risk of deterioration in global growth, the RBI is likely to go for an inter-meeting repo rate cut of 25-40 basis points.

“Given the evolving macroeconomic situation and deteriorating global backdrop, we believe the risks of an inter-meeting cut of 25-40 basis points have increased materially,” Barclays said in the note.

Even if the RBI does not make an inter-meeting move, it will cut the benchmark repo rate by at least 65 basis points by June, with risks biased towards more easing, the analysts at Barclays said.