RBI likely to leave rates unchanged in FY25, help maintain India's 'Goldilocks' environment: Morgan Stanley
inflation in India, improving productivity growth alongside external factors, economists now expect the Reserve Bank of India to hold the rates steady and expect no easing in FY25.
A report by Morgan Stanley on Tuesday said that the RBI is likely to keep the policy rate steady at 6.5 per cent due to global factors such as higher commodity prices, delayed start or shallower easing from the Fed and a stronger dollar.
In addition, the decision also depends on domestic factors such as continued upside surprise in growth, driven by capex and productivity, implying higher equilibrium real rates.
The confluence of both these global and domestic factors warrants the RBI staying put, as per the report authored by economists Upasana Chachra and Bani Gambhir.
“An important support for growth expansion to be sustained is a well-calibrated policy response, which helps to maintain the Goldilocks environment with a healthy trend in growth, moderating inflation, and a manageable current account deficit,” the report says.
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A Goldilocks scenario is one where the economy is not hot enough to give inflation a filip, but growing fast enough to evade a recessionary
