{"id":8818,"date":"2024-05-02T18:38:58","date_gmt":"2024-05-02T13:08:58","guid":{"rendered":"http:\/\/kcpalanisamy.com\/?p=8818"},"modified":"2024-05-02T18:38:58","modified_gmt":"2024-05-02T13:08:58","slug":"rbi-likely-to-delay-slashing-interest-rates-amid-risks-of-rising-inflation","status":"publish","type":"post","link":"http:\/\/kcpalanisamy.com\/?p=8818","title":{"rendered":"RBI likely to delay slashing interest rates amid risks of rising inflation!"},"content":{"rendered":"

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\nThe RBI has kept interest rates on hold for seven straight meetings, with Governor Shaktikanta Das signaling his unwillingness to ease rates unless inflation settles around its target of 4 per cent. Inflation eased to below 5 per cent in March, though an unusually hot summer could push up food costs.<\/p>\n

The Reserve Bank of India will likely delay cutting interest rates until the final quarter of the year, the latest Bloomberg survey shows, as inflation risks rise and the US Federal Reserve keeps rates on hold for longer.<\/p>\n

The RBI may start cutting its benchmark repurchase rate, currently at 6.5 per cent, by a total of 50 basis points in the October-December period before pausing for a few months, the monthly survey shows. In the previous survey, economists had predicted a reduction in July-September quarter.<\/p>\n

With India\u2019s growth-inflation dynamics healthy, \u201cthe global and geopolitical developments remain key to track,\u201d said Achala Jethmalani, an economist at RBL Bank Ltd. \u201cThe monetary policy pivot in advanced economies, particularly the US Fed, could possibly alter the domestic rate scenarios too.\u201d<\/p>\n

The RBI has kept interest rates on hold for seven straight meetings, with Governor Shaktikanta Das signaling his unwillingness to ease rates unless inflation settles around the central bank\u2019s target of 4 per cent. Inflation eased to below 5 per cent in March, though an unusually hot summer could push up food costs.<\/p>\n

Economists lowered their quarterly inflation forecasts through to December slightly, according to the Bloomberg survey. The projection for the full fiscal year was kept unchanged at 4.5 per cent, the survey results showed.<\/p>\n

Most economists don\u2019t expect the RBI to cut rates before the Fed pivots, which may not be until later in the year or at all in 2024. Central bankers in emerging markets like India would be wary of undermining their currencies further by cutting rates Morgan Stanley predicted this month that most central banks in Asia will delay cutting rates, with India not expected to ease at all this year.<\/p>\n

Radhika Rao, an economist at DBS Group Holdings Ltd., said India\u2019s rate cuts could be pushed back to the next financial year that starts in April 2025.<\/p>\n

\u201cConsidering near-term inflation risks, strong growth and a delay in US rate cut expectations, we expect the RBI to stay on an extended pause in fiscal year 2024-25,\u201d she wrote in a note this week.<\/p>\n

Economists in the Bloomberg survey raised their projections for economic growth for the January-March quarter slightly to 6.3 per cent from 6.1 per cent. They see the economy expanding 6.7 per cent in the full fiscal year that ends in March, up from last month\u2019s estimate of 6.6 per cent, according to the survey.<\/p>\n

\u201cRBI should not be in a hurry to cut rates and has no need to hike rates further,\u201d said Shaun Lim, a currency strategist at Malayan Banking Bhd. \u201cThe economy is doing well and inflation is under control.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The RBI has kept interest rates on hold for seven straight meetings, with Governor Shaktikanta Das signaling his unwillingness to ease rates unless inflation settles around its target of 4 per cent. Inflation eased to below 5 per cent in March, though an unusually hot summer could push up food costs. The Reserve Bank of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"image","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8818","post","type-post","status-publish","format-image","hentry","category-uncategorized","post_format-post-format-image"],"amp_enabled":true,"_links":{"self":[{"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=\/wp\/v2\/posts\/8818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8818"}],"version-history":[{"count":0,"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=\/wp\/v2\/posts\/8818\/revisions"}],"wp:attachment":[{"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8818"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/kcpalanisamy.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}