Repo Rate: 'RBI may initiate repo rate cut in June's MPC meeting', estimates Morgan Stanley
Repo Rate: Within a fiscal year, the RBI typically convenes six bimonthly meetings. Interest rates, the money supply, the forecast for inflation, and other macroeconomic variables are covered during this.
Morgan Stanley expects that the Reserve Bank of India will begin reducing interest rates in June 2024, keeping both retail and wholesale inflation rates within reasonable bounds at that time. During its February review meeting, the Monetary Policy Committee of the Reserve Bank of India unanimously opted to preserve the current status quo, with the policy repo rate remaining at 6.5% for the sixth straight time. The interest rate at which the RBI lends money to other banks is known as the repo rate.
Within a fiscal year, the RBI typically convenes six bimonthly meetings. Interest rates, the money supply, the forecast for inflation, and other macroeconomic variables are covered during this.
Leading investment banker Morgan Stanley has said in a report 'India Economics - Macro Indicators Chartbook: Strength in Growth, Stability in Macro-Fundamentals' written by Upasana Chhachara and Bani Gambhir that the RBI will reduce the repo rate by 50 basis points from June 2024. Can initiate reduction. "...we remain cautious that stronger-than-expected credit growth could delay the start of repo rate cuts," the report said.
Retail inflation fell to a three-month low of 5.1% in January from 5.7% in December. Wholesale inflation eased to 0.3% year-on-year in January from 0.7% in the previous month. However, retail inflation in India is between 2 to 6 per cent, the target of the Reserve Bank. Given inflation, the central bank may consider cutting the repo rate. Inflation has been a matter of concern for many countries, including advanced economies, but India has managed to manage its inflation to a large extent.
