The Reserve Bank of India (RBI) will keep its benchmark interest rate at 6.50% until the end of March 2024, according to a Reuters poll of economists who have pushed downgraded their expectations for the first rate cut in the second quarter of 2024 than expected. first quarter in a June survey.
Inflation in Asia’s third-largest economy broke a four-month downtrend, rising to 4.81% last month as food prices soared. Few are predicting a decline in the coming months, leaving the RBI with little reason to change policy now.
Indeed, inflation is expected to average above 5% this fiscal year, ending March 31, 2024, well above the RBI’s medium-term target of 4%.
A July 13-31 Reuters poll of 75 economists showed the central bank is expected to keep the repo rate at 6.50% at its August 1 meeting. 10 political meetings.
The majority said interest rates will stay at this level through the first quarter of 2024, followed by a 50 basis point cut by the end of June, around the same time the market expects the US Federal Reserve to start interest rate cuts. In a survey in June, economists predicted that the RBI would cut the repo rate by 25 basis points at the end of March 2024 and another 25 basis points in the April-June quarter.
“They won’t be very assertive in cutting rates and that’s why we think this pause… could last longer unless there are clear signs of weakness,” said Suman Chowdhuri. milder growth or lower core inflation”. , chief economist at Acuite Ratings and Research. Of those making forecasts through March 2024, a small majority, 32 out of 62, expect the rate to remain at 6.50%, while 20 forecast a drop to 6, 25% and 10 people reported 6.00% or less.
Although a small number of forecasters offer a view on interest rates next year, the median forecast suggests no decline beyond 6.00%.
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