RBI May Cut Repo Rate Amidst Global Uncertainty

RBI Likely to Cut Repo Rate, Says Expert

The Reserve Bank of India (RBI) is expected to cut the repo rate by 25 basis points in its upcoming policy announcement, according to Goldman Sachs. This move is anticipated due to the current economic slowdown and global tensions. [[Santanu Sengupta]], India economist at Goldman Sachs, told a financial news channel, “There is going to be a lot of uncertainty going forward. Policymakers will have to navigate within this mix.” He also highlighted that changes in tariffs and global economic shifts could cause a slight rise in inflation, but India is expected to be less affected than other economies.

New Faces on the Monetary Policy Committee

This is the first Monetary Policy Committee (MPC) meeting after the appointment of RBI Governor [[Sanjay Malhotra]] and the re-designation of [[Rajeshwar Rao]] in the monetary policy department. It’s also the second MPC meeting for the three external members — [[Ram Singh]], [[Saugata Bhattacharya]], and [[Nagesh Kumar]]. Out of 28 economists surveyed by Bloomberg, 24 predict a repo rate cut on Friday.

Fiscal Strength and Currency Stance

Sengupta acknowledged that fiscal authorities have kept some resources for potential future action, while the RBI has made noticeable changes in its currency stance. “At a time of cyclical slowdown, this will allow the RBI to move forward with an easing stance,” he added. He also mentioned that recent measures to ease liquidity have been substantial. “The open market operations will extend the balance sheet, creating reserve money growth and supporting the economy in the second half of the year,” he said.

Rupee Depreciation a ‘Good Macro Adjustment’

Regarding the recent fall in the rupee’s value, Sengupta views it as a “catch-up adjustment, which should have happened earlier.” He considers it a “positive macro adjustment” after India experienced very low currency volatility for most of last year.

Monetary Easing to Support Economic Momentum

Sengupta believes that monetary easing will help boost India’s economic momentum in the coming months. The expert analysis points towards a rate cut amidst concerns about falling rupee and GDP growth. This latest news update suggests that the RBI’s policy decision will play a key role in shaping India’s economic outlook.

Market Analysis and Updates

This analysis and the latest updates from the market indicate a potential shift in the RBI’s monetary policy. The global economic scenario and its impact on India’s business landscape are key factors influencing this anticipated change. Today’s news highlights the importance of these developments for investors and businesses alike.

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