RBI: Will have to wait till October for cheap loans, repo rate cut expected by third quarter
RBI: Economists say that a reduction in repo rate by 0.50 percent is expected throughout this year. At present the repo rate remains at 6.5 percent. RBI has kept the rates unchanged seven times.
For low-cost loans, people might have to wait until October. The RBI may decide to wait until the third quarter to lower the repo rate due to the possibility of inflation and the absence of a change in the US central bank's rates. Earlier, economists predicted that the RBI would lower rates during its June meeting. This decision can now be made between October and December, taking inflation risk into account.
For this year, economists predict a 0.50 percent decrease in the repo rate. Right now, the repo rate stays at 6.5 percent. The RBI has seven times maintained the same rates. The RBI ceiling on inflation remains unhit.
Economists have slightly lowered their quarterly inflation forecast for December. RBL Bank economist Achala Jethmalani said India's growth rate is good. Inflation is under control. But, if food prices increase in summer, inflation may increase RBI's concern. At the same time, it is important to keep an eye on global developments. RBI will also make its strategy based on the kind of decisions that central banks around the world, including America, will take regarding interest rates.
Morgan Stanley says most central banks in Asia will delay rate cuts. There is no expectation of any cut this year in India also. Radhika Rao, economist at DBS Group Holdings, said India may postpone the rate cut until the fiscal year starting in April 2025.
The US central bank may also cut or postpone the cut by the end of this year. Central banks in emerging markets like India will be wary of further weakening their currencies by cutting rates.
