RBI to maintain status quo on policy, raise GDP forecast: Mint poll
MUMBAI : The Reserve Bank of India’s monetary policy committee (MPC) is likely to maintain status quo on policy rates for the fifth consecutive time, 10 economists polled by Mint said, amid persistent inflation risks. They also expect the committee to nudge up its GDP growth forecast for FY24, from 6.5% to 6.7-6.8%, following higher-than-expected growth in the September quarter (7.6% year-on-year). A majority of the economists polled expect the rate-setting panel to keep the repo rate unchanged at 6.5%.
As for its inflation forecast, they expect the committee to maintain it at 5.4% for the current financial year, although it could sound hawkish due to recurring supply-side shocks. The committee is scheduled to meet for three days beginning 6 December. The higher-than-expected Q2 growth number indicates the panel is unlikely to start cutting rates soon.
Most economists expect the committee to cut rates only in the second half of the next financial year, depending on the stance taken by the US Federal Reserve. “The focus of the policy will remain on ensuring the disinflation process and aligning inflation with the 4% target. Headline (consumer price index) inflation is expected to remain above 5% till Q1FY25, which is above the 4% target," said Gaura Sengupta, India economist at IDFC First Bank.
“Hence, we expect RBI to remain on a prolonged pause into the middle of next year and don’t expect the stance to change anytime soon. MPC members are likely to continue to highlight risk from successive food inflation shocks." Retail inflation eased to a four-month low of 4.87% in October–when the panel previously met–from 5.02% in the month prior. But food inflation, which accounts for nearly half of the overall consumer price
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