RBI: Rbi Likely To Hold Rates As Gdp Grows At Steady Pace | Mumbai News

Mar31,2024


Mumbai: Has given strong economic growth reserve Bank of India reason to wear Rate of interest When monetary policy committee See you this week. Now the focus is shifting to liquidity, the market expects the central bank to gradually ease liquidity Before reducing rates.
In its last policy meeting in February, the RBI had kept the repo rate at 6.5% for the sixth consecutive meeting, maintaining its 'accommodative stance'. By October-December 2023 GDP growth With a surprise rise of 8.4%, the RBI's concern is entirely about inflation management.
While core inflation has fallen below the RBI's target of 4%, food prices are rising due to periodic supply issues. As a result, inflation is expected to remain above 5% in the first half of 2024.
“Active intervention by the RBI and government spending last month has reduced liquidity in the banking system, leading to softening of inter-bank and short-term lending rates for banks and non-bank entities. In our view, when the RBI eventually starts the easing cycle, we expect them to run liquidity surplus and let the inter-bank rate trade below the repo rate,” said Shantanu Sengupta, an economist at Goldman Sachs. The investment bank expects the RBI to cut interest rates by 25 basis points (100bps = 1 percentage point) twice in July-September and October-December of 2024.

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Rahul Bajoria, MD and head of emerging Asia economics at Barclays, said the RBI has pulled back its tightening on liquidity management since the February meeting, which has led to lower weighted average call rates.
“Not much has changed since the last MPC meeting in February, with the RBI overseeing an economy enjoying high growth and falling core inflation, amid stable macro stability parameters. In this backdrop, we expect the MPC to keep the repo rate intact at 6.5% and the monetary policy stance to remain on 'return to accommodative' stance,” Bajoria said.
Kaushik Das, chief economist at Deutsche Bank India, said the chances of the Monetary Policy Committee voting for a change in stance are slim. “We expect the RBI to once again maintain the policy pause on April 5, keeping the repo rate steady at 6.5%. As far as the stance is concerned, we think there is little chance that it could change from the current 'return to housing' to 'neutral', but if it does, it would be a positive for the market. Will be surprised,” said Das.

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