The Reserve Bank of India (RBI) is expected to reduce its main policy rate by 25 basis points to 6.25% in December to support growth, a poll shows.
The news agency polled a survey of economists who expect this cut, which is likely based on global inflation, which is expected to decelerate in the coming months.
While the inflation rate in September rose unexpectedly to 5.49% systematically, analysts expect deceleration. Inflation is expected to ease slightly to an average of 4.9 percent in the current quarter and further to 4.6 percent in the first quarter of the current fiscal year. The downward trend that this projection indicated would free up the RBI to make more accommodative monetary policy settings. The central bank, which has held interest rates at its highest level since late 2019 at its last 10 consecutive policy meetings, is looking set to respond to the weakness in the pace of the economy.
RBI Governor Shaktikanta Das recently said that the inflation and growth divide is ‘well-balanced,’ and inflation should tone down further in the next quarter. Observers mention that such a long-term picture of inflation, together with signs of subdued economic growth, might cause the RBI to reduce interest rates. They also switched to a more ‘neutral’ in October, which most of the economists have Regarding the same view of the bank as preparing for a change of policy.
Out of 57 respondents in the Oct 21-29 poll, 30 projected that the RBI’s MPC will reduce the benchmark repo rate to 6.25 % in the December 4-6 meeting. The remainder of 27, on the other hand, expect no rate adjustments. Economist at Pantheon Miguel Chanco also predicts a cut in December because the inflation is still “manageable”. He also points out that his view is based on expectations that the GDP number to be released in late November will be lower than the RBI expected.
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