“We Were Getting Contrary Signals From The Market On Rural Demand”


Given the importance placed by MPC on inflation, it looks unlikely that there can be a rate cut before August of next year


Madan Sabnavis, Chief Economist, Bank of Baroda

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.”

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