MPC Meet: RBI is unlikely to cut rates, likely to maintain status quo – World News Network

Last updated: April 3, 2024 12:00 am

3 Min Read

Mumba (Maharashtra) [India], April 3 (ANI): As FY25 first Monetary Policy Committee (MPC) meeting begins, it seems the Reserve Bank of India is unlikely to cut rates.
Experts believe the central bank is very likely to maintain the status quo on interest rates along with caution on inflation and the geo-political outlook
The MPC had maintained the status quo on policy rates and stance in its last review which was held in February 2024.
The decision however was not unanimous and one member has recommended a rate cut of 25 basis points and policy change stand to neutral.
Since the last policy, rating agencies have revised India’s growth forecast upwards. Finance Minister Nirmala Sitharaman, said on Saturday that India will grow over 8 per cent in FY24.
Inflation has dropped and under the range of RBO comfort zone, CPI inflation was 5.1 per cent in February 2024 from over 5.5 per cent in December 2023.
The core CPI inflation excluding food and beverages was at a low of 3.5 per cent in February 2024.
However, food inflation at above 7 per cent was a concern, but with a recent cut in the prices of petrol, diesel and LPG inflation is likely to further fall in March and may come below 5 per cent.
India Meteorological department (IMD) recent announcement of above-normal temperatures during April-June, this may be a concern for Inflation of vegetable, fruits and other perishable items.
Also prices of rice, pulses have shown an upward trend on prices may be a concern for the MPC while taking a decision. However, softening prices of non-food items will give some relief to MPC.
Generally normal monsoon follows above normal temperatures, presuming that the average CPI inflation is likely to be in the RBI’s comfort zone of 4-6 per cent in FY25.
Experts believe that RBI is unlikely to change its policy stance before the August 2024 MPC review and any rate cut is unlikely before that.
The US Fed has also recently indicated that they are not in a hurry to cut rates. All these suggest that the RBI too is unlikely to go for a rate cut before the October 2024 policy. (ANI)

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