RBI Poised to Hold Rates Amid Inflation Concerns

The Reserve Bank of India (RBI) is expected to keep the benchmark interest rate unchanged in its upcoming monetary policy review. With inflation breaching limits and GDP growth underperforming, experts suggest rate cuts might only be possible in February 2025, emphasizing the central bank's challenging task ahead.

The Reserve Bank of India is likely to maintain the benchmark interest rate in its next monetary policy review. This decision comes as inflation has exceeded its tolerance limit, prompting experts to hint at potential GDP growth forecast adjustments following second-quarter economic disappointments.

The Monetary Policy Committee, led by Reserve Bank Governor Shaktikanta Das, will convene from December 4 to 6, 2024, with the outcome to be revealed on the final day. Previously anticipated rate reductions appear less likely as retail inflation hovers above 6 per cent, a threshold that complicates immediate cuts.

Economists like Madan Sabnavis of Bank of Baroda and Aditi Nayar of ICRA highlight the impact of global uncertainties on inflation and economic growth forecasts, suggesting a status quo amid the current scenario. While the possibility of a rate cut arises in February, much depends on inflation trends in the forthcoming months.

(With inputs from agencies.)