New Delhi: The Reserve Bank of India (RBI) is set to announce the outcome of the Monetary Policy Committee (MPC) decision on Thursday amid market speculation that the central bank could opt for another pause in interest rates this time too.
The three-day MPC meeting, chaired by RBI Governor Shaktikanta Das, began on February 6 and will conclude today. A year is divided into six bimonthly reviews of the central bank’s monetary policy. Additionally, there are off-cycle reviews, where the central bank holds additional sessions in urgent situations.
For a year, the Reserve Bank has kept the repo rate unchanged at 6.5 per cent. The benchmark interest rate was last raised in February 2023 to 6.5 percent from 6.25 percent.
Suman Chowdhury, chief economist and head of research at Acuité Ratings & Research, said RBI MPC is likely to maintain the status quo on rates at least until June 2024.
“We foresee a subsequent rate cut reaching between 50 and 75 basis points in the next six months. However, the policy stance could change to neutral by April 24, given the low probability of a further interest rate increase. “he added. .
Echoing the same views on the status quo of rates, George Alexander Muthoot, MD, Muthoot Finance, said that the focus on fiscal consolidation in the recent interim budget of the honorable Finance Minister may give some scope to the RBI to change its stance to “Neutral” from the current stance of “withdraw from housing”.
“In the context of the recent tight system liquidity conditions, the industry will be attentive to the RBI’s communication and view on system liquidity. Amid the slowdown in the global economy, the resilience of the Indian economy stands out clearly, and the government is focusing on capital expenditure along with the RBI’s prudent monetary policy is likely to keep the Indian economy on a steady growth trajectory, keeping demand conditions intact,” Muthoot added.
Meanwhile, a report by SBI Research said it expects the RBI to continue its pause stance in the upcoming policy. The report also adds that we believe the RBI should continue with its stance of withdrawing accommodation.
“Strong US non-farm payrolls and wages data appear to have pushed back market expectations of a quick turn towards rate cuts. The first rate cut on the table from June 24. “August 24 seems like the best bet now,” he added.