Skip to main content

RBI to weigh growth slowdown, inflation at its MPC meeting this December

 Despite GDP growth declining to 5.4 per cent in the Julyā€“September quarter, the Reserve Bank of Indiaā€™s (RBI) six-member monetary policy committee (MPC) is expected to maintain the current repo rate during its review meeting this week, according to a Business Standard survey of 10 respondents. Among the respondents, only IDFC First Bank forecast a 25-basis-point (bps) reduction in the repo rate. Since May 2022, the RBI has raised the repo rate by 250 bps to 6.5 per cent as of February 2023 and has held it steady across the last 10 policy reviews. The latest GDP figures, published on Friday (November 29), showed that growth for Q2 FY25 slowed to 5.4 per cent year-on-year, down from 6.7 per cent in Q1. Most survey participants suggested that the RBI might revise its growth and inflation projections for the financial year. The poll indicated that the central bank could lower its growth estimate from the current 7.2 per cent and increase its inflation forecast, currently at 4.5 per cent. While a rate cut appears unlikely, liquidity management is expected to be a key focus in the December MPC review, scheduled for release on Friday (December 6).

 

HDFC report expects rebound in rural demand -A report by HDFC Bank, Indiaā€™s largest private sector lender, echoed the sentiment that the central bank would likely maintain the repo rate at 6.5 per cent in its final MPC meeting of the year. HDFC Bankā€™s analysis highlighted a potential rebound in rural demand during the fiscal yearā€™s second half, driven by robust agricultural output, government scheme disbursements, and increased public spending. These factors could collectively boost economic activity. Meanwhile, a Reuters poll indicated that the RBI is likely to maintain the repo rate during its December 6 meeting, as rising consumer inflation has led many economists to postpone expectations of a rate cut to February. Retail inflation breached the RBIā€™s tolerance ceiling of 6 per cent in October, primarily due to surging food prices. RBI Governor Shaktikanta Das, whose tenure is set to end on December 10 but is widely expected to be extended, has cautioned against premature rate cuts, warning of associated risks. This follows the central bankā€™s October decision to shift its monetary policy stance to ā€œneutralā€ amid calls from key government officials to lower rates and support the slowing economy. The Reuters poll, conducted between November 18 and 27, found that 62 of 67 economists predicted the RBI would hold the repo rate at 6.5 per cent during the December meeting, with only five forecasting a 25-basis-point cut. This marks a shift from an earlier poll, where a slim majority anticipated a reduction to 6.25 per cent in December.

 

Union Minister wants RBI to cut rates- Last month, Union Commerce Minister Piyush Goyal urged the RBI to consider lowering interest rates, questioning the emphasis on food inflation in monetary policy decisions. Speaking at the CNBC-TV18 Global Leadership Summit, he described basing rate decisions on volatile food prices as a flawed approach.He clarified that these views were personal and did not represent the governmentā€™s official stance. Goyal also expressed optimism that inflationary pressures would ease by December, noting that inflation under the Modi administration had been the lowest since independence.

 

What happened in RBIā€™s previous MPC meeting? - In the previous MPC meeting held on October 9, RBI Governor Shaktikanta Das announced that the repo rate would remain at 6.5 per cent, marking the 10th consecutive review with no changes. The repo rate, raised to 6.5 per cent in February 2023, is the rate at which the RBI lends to commercial banks. However, the RBIā€™s shift to a ā€œneutralā€ stance signalled the possibility of rate cuts in future policy decisions.

 

 

 

 

- Business standard 02 December 2024

 

Comments

  1. Companies ensure timely delivery with minimal paperwork, catering to busy schedules. Your bike is packed securely and transported in specialized vehicles. This reliability makes it a preferred option for many. Bike transport in Hyderabad

    ReplyDelete

Post a Comment

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   ā€œThe renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,ā€ said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...

GST collection for November rises by 8.5% to Rs.1.82 trillion

  New Delhi: Driven by festive demand, the Goods and Services Tax (GST) collections for the Union and state governments climbed to Rs.1.82 trillion in November, marking an 8.5% year-on-year growth, according to official data released on Sunday. Sequentially, however, the latest collection figures are lower than the Rs.1.87 trillion reported in October, which was the second highest reported so far since the new indirect tax regime was introduced in 2017. The highest-ever GST collection of Rs.2.1 trillion was reported in April. The consumption tax figures highlight the positive impact of the recent festive season on goods purchases, providing a much-needed boost the industry had been anticipating. The uptick in GST collections driven by festive demand had been anticipated by policymakers, who remain optimistic about sustained growth in rural consumption and an improvement in urban demand. The Ministry of Finance, in its latest monthly economic review released last week, stated that I...