2 weeks Ago By Anurag Kumar
New Delhi: Will RBI cut its key policy rate in December this year? According to a Reuters poll, India's central bank is expected to cut its policy rate by a quarter point to 6.25% to bolster slowing economic growth. The economists in this poll also predicted a moderate rise in inflation in the near term.
It is noteworthy here that inflation rose to 5.49% in September but is expected to ease to an average of 4.9% this quarter and drop to 4.
6% in January-March. This might allow the RBI to ease the policy rates. The apex bank has kept its interest rates unchanged since early 2019.
Governor Shaktikanta Das recently said that the balance between inflation and economic growth is "well-poised," with inflation expected to moderate in the upcoming quarter. The recent shift to a 'neutral' stance this month, combined with economists predicting a slight slowdown in growth, has tilted the scales slightly in favour of a potential rate cut. In a Reuters poll conducted from October 21-29, a slim majority of economists—30 out of 57—predicted that the RBI will cut the repo rate by 25 basis points to 6.
25% during its meeting from December 4-6. Meanwhile, the remaining 27 economists expect no change in the rate. Notably, the RBI decided to maintain its current policy rates at 6.
5%, opting for a status quo approach. This decision was reached with the agreement of five out of six members after assessing current macroeconomic conditions and future projections. However, the central bank has changed its monetary policy stance to neutral, indicating a balanced outlook for future rate adjustments.
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