IANS | 02 Apr, 2024
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) may
cut repo rate only in the third quarter of FY25 and not before, said a
top economist in the State Bank of India (SBI).
In a research
report, Soumya Kanti Ghosh, the Group Chief Economic Advisor, also said
that the RBI will not change its stance and continue with the withdrawal
of accommodation.
The first meeting of the MPC for this fiscal will be held this week.
The repo rate is the rate at which the RBI lends to commercial banks. Currently, the rate is 6.5 per cent.
According
to Ghosh, with moderate fuel prices, inflation is currently being
driven by food price dynamics. The Consumer Price Index (CPI) inflation
is mostly driven by 'good' inflation (economists are of the view that
inflation at about 2 per cent is good for the economy).
Looking
ahead, evolving food prices will determine domestic inflation. CPI
inflation is expected to remain slightly above 5 per cent in the
remaining months of FY24. The core CPI declined to 3.37 per cent - a
52-month low, Ghosh said in the report.
He also said that
inflation is expected to decline till July this year, but increase after
that to reach a peak of 5.4 per cent in September, followed by a
deceleration. For the whole of FY25, CPI inflation is likely to average
to 4.5 per cent (FY24 - 5.4 per cent).
