RBI Holds Steady Amid Growth Downgrade Predictions

Analysts suggest the Reserve Bank will maintain interest rates alongside possible liquidity measures despite tepid Q2FY25 GDP growth data. Most anticipate a rate cut in February, while December's policy review might focus on cash reserve ratio tweaks. GDP growth forecasts have been lowered by analysts due to inflation concerns.

Amid recent sluggish Q2FY25 GDP growth figures, analysts recommend the Reserve Bank avoid reactionary measures and predict a rate cut in February. As the central bank gears up to announce its rate decision on Friday, it is expected to maintain the repo rate for the 11th consecutive time. However, economists speculate that liquidity measures could include modifications to the cash reserve ratio or deposit proportions.

The Monetary Policy Committee, under Governor Shaktikanta Das, is scheduled to convene from December 4-6, with decisions to be announced on the final day. Analysts have revised their FY25 GDP growth forecasts downward, some projecting a drop to 6.3%, contrasting with the Reserve Bank's previous 7.2% estimate.

In light of persistent inflation, economic experts, including those from SBI and Deutsche Bank, advise against hasty rate cuts, advocating instead for micro-based CRR adjustments. Simultaneously, HSBC and Bofa Global anticipate future rate cuts but expect a status quo for upcoming sessions, considering the inflation target has yet to be achieved.

(With inputs from agencies.)