RBI may continue status quo on interest rate, moderate GDP growth forecast: Experts
The Hindu
RBI likely to keep interest rates unchanged due to high inflation and low GDP growth, experts predict.
The RBI is likely to keep the benchmark interest rate unchanged for one more time in its bilateral monetary policy review later in the week as inflation has breached its upper tolerance limit and may also moderate the growth forecast given the disappointing second quarter GDP numbers, experts say.
Reserve Bank Governor-headed six-member Monetary Policy Committee (MPC) is scheduled to meet on December 4 to 6, 2024. The decision of the rate-setting panel will be announced on December 6 by Governor Shaktikanta Das.
It was widely anticipated that the RBI would start reducing the benchmark interest rates soon but the central bank will have little option this time around as the latest print of retail inflation is above 6%.
The Reserve Bank has kept the repo or short-term lending rate unchanged at 6.5% since February 2023 and experts think some easing could only be possible in February.
Madan Sabnavis, Chief Economist, Bank of Baroda said given the rather uncertain global environment and the possible impact on inflation and the fact that currently inflation has been averaging close to 5.9% in the last two months, a status quo on repo rate will be the logical outcome from the policy.
"There would be a change in RBI projections for both inflation and GDP as inflation has been higher so far than the RBI forecast for Q3 and GDP growth has come much below expectations in Q2. It would hence be of interest to see what the projections this time are," Mr. Sabnavis said.
India's economic growth slowed to near two-year low of 5.4% in the September quarter of this fiscal due to poor performance of manufacturing and mining sectors, but the country continued to remain the fastest-growing large economy, as per government data released on Friday.
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