RBI-MPC Won’t Cut Repo Rate Anytime Soon, Not Before US Federal Reserve

Chennai
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will not revise downwards the repo rate anytime soon and that too not ahead of the US Federal Reserve, said economists.
They were reacting to RBI’s Monetary Policy Committee (MPC) to maintain status quo as regards to the repo rate that is 6.5 per cent.
Amid a volatile global economic scenario and lingering risks to domestic inflation, it is prudent that the RBI has followed a wait-and-watch strategy, Rajani Sinha, Chief Economist, CARE Ratings. Going ahead, with the domestic growth holding up well, we have raised our GDP growth projection to 6.5 per cent for FY24 (from previous projection of 6.1 per cent), Sinha remarked.
RBI Governor Shaktikanta Das has softly recognised that more financial stability risks may unfold with the unprecedented pace of tightening in global policy rates, said Madhavi Arora, Lead Economist, Emkay Global Financial Services said.
According to Arora, in this fast evolving world, it is unlikely the RBI would be too adventurous on either side of rate actions, and is unlikely to precede the Federal Reserve in reversing its course of rate hikes in the future. We do not see any rate reversal by the RBI in FY24, Arora added.
While the MPC’s decision to maintain the status quo was expected, Aalesh Avlani Founder, Credit Wise Capital said a slightly aggressive stance of reducing the rate would have been appreciated to fuel growth.