RBI Holds Rates Steady Amid Geopolitical and Inflation Concerns

The Reserve Bank of India's decision to keep key rates unchanged was discussed by leading economists and industry leaders. While a December rate cut is expected, the central bank remains cautious due to global geopolitical tensions and domestic inflation challenges. The decision supports economic growth and sector momentum.

The Reserve Bank of India (RBI) has opted to maintain key rates at current levels, a decision that has garnered insights from economists and industry leaders. Dharmakirti Joshi, Chief Economist at CRISIL, described the Monetary Policy Committee's choice as a 'neutral' stance, signaling prudence concerning future adjustments.

Joshi observed that a rate cut this December could be on the cards, especially following the US Federal Reserve's notable 50 basis point decrease in September. However, domestic inflation continues to be the foremost concern for emerging markets, justifying the RBI's careful approach amidst global uncertainties such as Middle Eastern tensions and variations in US political climate.

Anshuman Magazine, CBRE's regional head, lauded the RBI for its balanced approach, underscoring the potential benefit of steady repo rates for economic growth during the festive season. Similarly, Upasna Bhardwaj from Kotak Mahindra Bank aligned with this expectation, predicting a modest rate easing commencing in December.

Rajeev Radhakrishnan of SBI Mutual Fund highlighted the RBI's focus on addressing system liquidity and financial stability. Meanwhile, Sujan Hajra from Anand Rathi Shares and Stock Brokers noted that while growth and inflation outlooks are positive, geopolitical tensions and unexpected weather changes remain central bank watchpoints.

(With inputs from agencies.)