Will RBI MPC Rate Cut? There is a suspense on this.
According to all the reports of the country, the decision taken by the Reserve Bank of India at the repo rate can be very difficult. There are several reasons to cut interest rates in front of the members of the Monetary Policy Committee (MPC). Inflation is very low. Also, Economic growth has shocked the high American tariff. In such a situation, the interest rates can be seen by 0.25 percent in interest rates from RBI MPC. On the other hand, the major decline in the rupee remains a serious subject for RBI.
In such a situation, many experts say that this time also MPC can adopt a vigilant stance and hold interest rates till December. By the way, many economists also say that RBI can reduce the estimate of current year inflation and keep the estimate of growth the same as already estimated. However, in the current year, the RBI had cut the repo rate by 1 percent in the months of February, April and June by 1 per cent in the months of February, April and June. There was no change in interest rates in the August policy meeting.
Sonal Badhan, an economist of Bank of Baroda, says that RBI will not make any change in the policy rate this time. If the RBI does 25 basis points then it will be a big surprise. The six -member MPC led by Governor Sanjay Malhotra will have to meet many goals this week. Inflation, which is hovering around the lower end of the target band of 2%-6%, is expected to decrease further after tax cuts, while the growth rate is likely to be affected by US President Donald Trump’s imposition of 50% tariff. Meanwhile, Malhotra’s cautious stance over the record to fall at a record low of the rupee and cut interest rates has made the relaxation of interest rates more challenging. Let us also tell you what kind of decision you can take after the RBI policy meeting.
There will be no change in interest rates?
In the ANI report, Badhan said that even if the RBI cuts 25 basis points in October, there is no possibility of any amendment in the GDP forecast for FY 26. He said that even if the RBI decides to cut the interest rates by 25 basis points, there is no possibility of any change in the estimate of GDP for FY 26. Changes in the monetary policy usually take 2-3 quarters to show their impact on real economy. If the central bank keeps the interest rates stable, then about its possible stance, Badhan emphasized that this comment could lean towards a soft trend.
He said that RBI has limited scope for rate cuts, so it is more likely that the RBI comment will be soft and its inflation for FY 26 will reduce about 50 basis points. This will provide relief to the bond yield. However, the attitude is likely to be unchanged on ‘neutral’. The governor’s comments and the approach of economic growth will be closely monitored for the signs of the future monetary policy. Economists are expected to fall to 5 per cent of the repo rate in this cycle.
Estimation of inflation and growth
The central bank does not seem to change its growth estimate. While the possibility of cuts in the estimate of expensive is visible. Although inflation had increased to 2.07 percent in August, yet due to better rains and GST cuts, the forecast remains favorable. The RBI had estimated 3.1 percent inflation for the current financial year began in April. Economist Gaurav Kapoor of IndusInd Bank estimates that the average inflation will be around 2.7 percent this year. According to experts, the tax deduction is also expected to help in compensating for the damage caused by tariffs and keeping growth around the upper end of the government’s forecast of 6.3% -6.8%. The RBI estimates an increase of 6.5 percent in this financial year. In the June quarter, India’s economy increased to more than 7.8 percent.