New Delhi: Ahead of the Reserve Bank of India’s (RBI) 6-member Monetary Policy Committee (MPC) meeting, an SBI research report said the central bank is expected to pause the key repo rate once again.
The RBI is expected to keep the repo rate unchanged at 6.5 percent, an SBI research report said.
“Based on all scenarios, RBI may keep repo rate unchanged at 6.5%, though control in CPI calls for lower repo rate but combining all factors, it is status quo period… ie, first rate cut not before 2′ FY25 (so far),’ the report said.
The report said it expects a pause in upcoming policy, saying, “downward revisions in US non-farm payrolls, higher GDP growth expectations, lower inflation, excess savings still seem to have detracted from the $1 trillion market’s expectations for a quick pivot to rate cuts.” Domestically, we believe 6.50%, we are in for a long break, no rate reversal cycle till June’24.”
It cites risk for growth mostly from sources outside the home
“Growth remains resilient. Higher oil prices pushing up inflation and/or tighter global financial conditions are key risks to currency, inflation and growth dynamics.”
A three-day MPC meeting chaired by RBI Governor Shaktikanta Das had decided to keep the repo rate at 6.5 percent in October.
The RBI governor added that Das said that considering economic factors, the MPC has projected a GDP growth rate of 6.5 per cent in the financial year 2024.
“As far as the inflation rate is concerned, the MPC’s forecast is 5.4 per cent for 2023-24, taking into account various domestic factors, including possible agricultural output,” he added.
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