SBI economist predicts RBI may reduce repo rate in Q3 FY25

Chennai, April 2 (IANS) A top economist at State Bank of India (SBI) has predicted that the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) may cut the repo rate only in the third quarter of FY25. In a research report, Soumya Kanti Ghosh, the Group Chief Economic Advisor, also mentioned that the RBI will maintain its current stance and continue with the withdrawal of accommodation. The first MPC meeting for this fiscal year is scheduled to take place this week.

Ghosh highlighted that the current inflation is primarily driven by food prices, with the Consumer Price Index (CPI) inflation being influenced by ‘good’ inflation. He anticipates that CPI inflation will slightly exceed 5 per cent in the remaining months of FY24. The core CPI has decreased to 3.37 per cent, marking a 52-month low.

Looking towards the future, the economist emphasized the significance of evolving food prices in determining domestic inflation. Ghosh expects inflation to decrease until July of this year, following which it will rise to a peak of 5.4 per cent in September before decreasing again. The average CPI inflation for FY25 is projected to be around 4.5 per cent, a slight decline from the previous fiscal year’s 5.4 per cent.

The repo rate, which currently stands at 6.5 per cent, is the rate at which the RBI lends to commercial banks. Ghosh’s analysis suggests that the MPC will maintain the rate until the third quarter of FY25. The economist’s insights provide valuable information for stakeholders anticipating changes in the monetary policy landscape.

–IANS
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