RBI governor
The RBI Monetary Policy Committee (MPC) meeting on two months has started from Wednesday. This time there are high expectations from this meeting. It is believed that after 5 years RBI may cut the main interest rate i.e. repo rate. If this happens, all kinds of debt from personal loan to auto loan will become cheaper. Experts are expecting a reduction of 0.25 percent in repo rate. The Reserve Bank had earlier reduced the repo rate by 0.40 percent to four percent in May 2020. Its purpose was to ensure that the economy could help in dealing with the Kovid epidemic and the subsequent lockdown crisis.
This is the best time for rate cut
After this, RBI started the process of increase in repo rate between the Russia-Ukraine War in May, 2022 which lasted till May, 2023. Right now the repo rate is 6.5 percent. Newly appointed Governor of RBI Sanjay Malhotra is presiding over the meeting. The decision of the six -member committee will be announced on Friday, February 7. Experts are of the opinion that this is a favorable time to cut repo rates, as it will serve as a complement of measures announced in the Union Budget to promote consumption -based demand. A research report by SBI states that the Consumer Price Index (CPI) -based retail inflation is expected to be reduced to 4.5 percent in the fourth quarter and an average of 4.8 percent in the current financial year.
The total rate cut may be 0.75% in the first phase
The report said that January inflation figures remain around 4.5 percent. The Research Report of the Economic Department of State Bank of India said, “We expect a reduction of 0.25 percent in the policy rate in the monetary policy review of February 2025.” The policy rate can be reduced by 0.75 percent in February and April with twice cuts. After that, after keeping the status quo, the second round of policy rate cuts can start from October 2025. ”
In which case can the rate be deferred?
Ekra’s chief economist Aditi Nair said, “We don’t think the fiscal incentives made in the Union Budget will have a significant impact on inflation.” We feel that the situation is in favor of rate cut in the monetary policy review of February 2025. ”Nair said, however, if the global factors cause more weakness in the exchange rate of the rupee against the dollar during this week. If, the policy rate cuts can be postponed by April 2025.
(With PTI/language input)
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