Given the importance placed by MPC on inflation, it looks unlikely that there can be a rate cut before August of next year
FinTech BizNews Service
Mumbai, December 8, 2023: Reserve Bank of India announced its monetary
policy on Friday. Madan Sabnavis, Chief Economist, Bank of Baroda,
indicates: “The policy does not have any surprise on the repo rate or stance.
However, there is a major revision in GDP forecasts for the year to 7% which is
predicated by a good third and fourth quarter which go with revival in consumption
demand. This is significant because we were getting contrary signals from the
market on rural demand. The RBI’s forecast of inflation for the quarters of next year
are important as the number goes less than 5% only in Q2 which means that given
the importance placed by MPC on inflation, it looks unlikely that there can be a rate
cut before August of next year. Also the RBI is satisfied with the liquidity situation
and has not announced any measures to augment the same. It is assumed that in
the general course of activity this equilibrium will be achieved.”