The Reserve Bank of India (RBI) is likely to maintain the status quo on the benchmark interest rate during the upcoming bi-monthly monetary policy review. The decision is mainly influenced by concerns over retail inflation and the possibility of worsening Middle East crisis impacting crude oil and commodity prices.
Since February 2023, the RBI has kept the repo rate unchanged at 6.5%, with experts suggesting that any easing might only occur in December. Factors such as rising core inflation, global uncertainty, and geopolitical risks contribute to the decision to hold rates steady.
Aditi Nayar, Chief Economist at Icra, anticipates a potential change in stance in October 2024 policy review, with rate cuts expected from December 2024 onwards. Similarly, an HSBC report predicts a shift in stance from ‘hawkish’ to ‘neutral’, followed by rate cuts in subsequent meetings.
As new external members join the MPC for the upcoming policy review, expectations remain high within the real estate sector for rate cuts. However, with inflation concerns and global economic factors in play, the MPC is likely to prioritize stability over immediate rate adjustments.
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