New Delhi

On Wednesday, the Reserve Bank of India’s (RBI) shift from a withdrawal of accommodation stance to a neutral position signaled a potential decrease in interest rates over the coming quarters, according to industry experts and chambers. Assocham described this monetary policy review as realistic and pragmatic, suggesting an upcoming rate cut, even though the Monetary Policy Committee (MPC) held the policy repo rate steady at 6.5 percent for now.

Deepak Sood, Secretary General of Assocham, viewed the move to a neutral stance as a positive sign of the RBI’s adaptable monetary policy, influenced by both domestic and global developments. The domestic economic outlook appears favorable, with inflation dropping below 4 percent and consumer demand expected to rise during the festive season. However, ongoing geopolitical events require careful monitoring, as noted by the RBI.

Assocham supports the RBI’s optimistic GDP growth forecast of 7.2 percent for fiscal year 2024-25, driven by improved agricultural conditions and rural demand. Signs of this recovery are evident in rising tractor, two-wheeler sales, and FMCG performance.

PHDCCI President Sanjeev Agrawal expressed expectations for the MPC to lower policy rates soon, emphasizing that the neutral stance would positively influence trade and industry. CareEdge Ratings Chief Economist Rajani Sinha indicated a possible 25-bps rate cut in December, depending on food inflation trends. Crisil Chief Economist Dharmakirti Joshi highlighted global uncertainties, including tensions in the Middle East, as factors behind the RBI’s cautious approach.