New Delhi: The Reserve Bank of India may not announce a repo rate cut, unlike counterparts in the US and UK, according to a report, by SBI’s Research report. This comes ahead of RBI’s monetary policy committee (MPC) meeting scheduled to start on October 7, 2024.
The RBI is committed to maintaining the stability of the Indian economy. With inflation rates already below the 4 per cent mark, the central bank may not tweak the interest rate, according to SBI Research.
Why RBI may not slash the repo rate
The RBI is likely to maintain an independent approach towards the repo rate while keeping an eye on the Indian economy. The SBI Research report stated that credit growth is key to deposit growth. When credit demand declines, deposit growth may follow suit, according to the report.
SBI Research also advocated for an improved investment cycle. This can only be supported if the BRI maintains the status quo on repo rates.
What Bank of Baroda has to say
According to a research report by the Bank of Baroda, another reason why the MPC may hold off on a rate cut is that the committee has ben newly constituted. The names of the new external members were announced on Tuesday. Accordingly, Saugata Bhattacharya and Nagesh Kumar, and Ram Singh will replace Ashima Goyal, Jayanth Varma, Shashanka Bhide.
The MPC was first constituted in 2016. The MPC will seek more clarity on how the economy has evolved. Another factor is volatility in food prices, which may prompt RBI to hold off on rate cuts, according to the report.
What is current repo rate
The repo rate has remained unchanged at 6.5 per cent for over 7 MPC cycles. The Reserve Bank of India first hiked the repo rate in 2022 in an off-cycle MPC meeting to counter rising inflation. India’s inflation has come down from a high of 7.79 per cent in April 2022 to 3.65 per cent in August 2024.
The Reserve Bank of India may not slash the repo rate, unlike counterparts in the US and UK, charting an independent view of monetary policy, according to a report by RBI Research. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
