The Reserve Bank of India (RBI) is expected to maintain the repo rate at its current level during the upcoming monetary policy meeting.
Experts believe that ongoing concerns about retail inflation and the potential escalation of the West Asia crisis, which could impact crude oil and commodity prices, will lead the RBI to keep rates unchanged.
Current Repo Rate Status
The repo rate has been held at 6.5% since February 2023. While there is some speculation that a rate cut could occur in December 2024, experts predict that for now, the RBI will maintain its cautious stance to manage inflation.
Key Opinions from Experts
Madan Sabnavis, Chief Economist at Bank of Baroda, highlighted that inflation is likely to remain above 5% in September and October, with current low inflation attributed to the base effect.
He expects no changes in the repo rate due to increasing core inflation and the uncertainty stemming from global geopolitical tensions, such as the Iran-Israel conflict.
Aditi Nair, Chief Economist at Icra, noted that with lower-than-expected GDP growth in the first quarter and subdued retail inflation in the second quarter, there may be a shift in policy stance to “neutral” in October 2024.
A potential repo rate cut of 0.25% could follow in December 2024 or February 2025.
Pradeep Aggarwal, Founder and Chairman of Signature Global, expressed that while home buyers and the real estate industry hope for a rate cut, the RBI is likely to keep interest rates unchanged for the tenth consecutive meeting.
Market and Economic Outlook
The Monetary Policy Committee (MPC), with newly appointed external members, will begin its meeting on Monday, October 9, with RBI Governor Shaktikanta Das announcing the results after the three-day meeting.
Inflation is a key concern for the RBI, with the government setting a target to keep retail inflation based on the Consumer Price Index (CPI) at 4% (±2%).
With economic uncertainties, experts believe the central bank will continue to prioritize inflation control, despite pressures from global markets and domestic sectors like real estate.
