RBI’s Monetary Policy: On Wednesday, the Monetary Policy Committee (MPC) of the Reserve Bank of India is scheduled to make its announcement regarding the policy rates. At 10:00 AM, RBI Governor Sanjay Malhotra will deliver the Monetary Policy Statement. At noon, the governor will respond to questions from the media and explain the committee’s reasoning during a post-policy press conference.
Bold Cut or Cautious Step?
Economists disagree greatly about what the RBI should decide. A more cautious approach is likely, according to some experts, while others are calling for a 50-basis-point (bps) reduction in the policy rate to boost economic development. The other anticipates a lower decrease of 25 basis points, citing worries about inflation, which remains a major obstacle for the central bank.
According to expert economists, the central bank has a fair chance to lower interest rates given the current domestic and international circumstances. To boost the Indian economy, Debopam Chaudhuri, Chief Economist at Piramal Group, recommended that the RBI think about front-loading the rate decreases.
Call for Aggressive Rate Cuts:
Debopam said, a 50 basis point rate drop in April could be a smart preemptive step. Adding that the RBI should think about front-loading rate decreases. Globally, rates are declining, domestic inflation is modest. The USDINR has somewhat recovered its lost territory. There is a significant chance for substantial rate decreases given these tendencies.
Mixed Expert Views on Rate Cut Size:
Chaudhuri thinks the RBI can afford to take a bold stance at this policy meeting to promote growth because inflation is currently under control and the currency has begun to rise once more. On the degree of rate reduction, however, different specialists have differing opinions. Bank of Baroda Economics Specialist Sonal Badhan concurs that the RBI will adopt a more growth-friendly posture but anticipates a modest decrease of 25 basis points.
In the face of growing uncertainty, central banks around the world are finding it difficult to preserve economic stability. The recent tariff announcements made by US President Donald Trump are one of the main causes for anxiety. The global economy is now under more strain as a result of these protectionist policies. Which makes it more difficult for central banks to balance promoting growth with containing inflation.
The MPC unanimously agreed to lower the policy repo rate by 25 basis points, from 6.5 percent to 6.25%, in its most recent monetary policy announcement on February 7. In the current easing cycle, this was the first rate cut. Since the decision would determine the direction of borrowing costs and liquidity in the economy. In the upcoming months, market players, companies, and policymakers are keeping a careful eye on it.
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