BENGALURU – According to a Reuters poll of economists, the Reserve Bank of India (RBI) is expected to maintain its key interest rate at 6.5 percent until the end of March 2024. This is a revision from a previous survey in June, where economists anticipated a rate cut in the first quarter of 2024.
Inflation in India’s economy, which is the third-largest in Asia, increased to 4.81 percent last month due to higher food prices, breaking a four-month downward trend. There are limited forecasts of a decline in inflation in the coming months, providing little reason for the RBI to change its policy at present.
Furthermore, economists predict that inflation will average above 5 percent for the fiscal year ending on March 31, 2024, which is above the RBI’s 4 percent medium-term target.
READ: India’s retail inflation rose more than expected in June on higher food prices
The Reuters poll conducted between July 13 and 31 indicated that the central bank is expected to maintain its repo rate at 6.5 percent at its August 10 policy meeting.
A majority of economists believe that the rates will remain unchanged until the first quarter of 2024, followed by a 50 basis point cut by the end of June. This cut is anticipated to align with the projected time when the U.S. Federal Reserve is expected to start reducing its rates.
READ: India rate cut bets pushed to mid-2024 amid inflation jump – traders
In the previous June survey, economists predicted a 25 basis point cut in the repo rate by the end of March 2024, followed by another 25 basis point cut in the April-June quarter.
“They are not going to be very decisive in cutting rates and that is why we believe this pause… may remain for a longer period unless there are clear signs of a slight weakness in growth or core inflation coming down,” said Suman Chowdhuri, chief economist at Acuite Ratings and Research.
Out of the economists who provided forecasts until March 2024, a slim majority of 32 out of 62 expected rates to remain at 6.5 percent, while 20 predicted a cut to 6.25 percent, and 10 anticipated rates of 6 percent or lower.
Although fewer forecasters offered rate views for the next year, the median forecasts indicated no further cuts beyond 6 percent.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
