Market expectations for a Reserve Bank of India (RBI) repo rate cut are gaining momentum as the Consumer Price Index (CPI) inflation shows signs of moderation. The easing inflation, driven by falling food and fuel prices, has created room for potential monetary easing to support economic growth.
Source:- bbc news
CPI inflation for November came in at 4.8%, comfortably within the RBI’s target band of 2-6% for the second consecutive month. Core inflation, which excludes volatile food and energy components, also showed a slight decline, reflecting a broader cooling in price pressures. Analysts suggest that these trends may prompt the RBI to adopt a more accommodative stance in the upcoming monetary policy review.
Source:- news 18
The repo rate, currently at 6.5%, has been held steady since April 2023 after a series of hikes aimed at curbing inflationary pressures. With inflation now stabilizing and growth concerns persisting, the central bank may consider a rate cut to stimulate demand and boost private investment.
Economists argue that a rate cut could provide much-needed relief to sectors like real estate, automobiles, and consumer goods, which are sensitive to borrowing costs. However, global economic uncertainties and lingering geopolitical risks might keep the RBI cautious.
Despite moderating inflation, the central bank remains vigilant about potential risks from fluctuating crude oil prices and unseasonal weather impacting food supplies. Any decision on rate cuts will likely hinge on sustained inflation moderation and broader economic indicators.
A repo rate cut, if implemented, would mark a shift in RBI’s policy stance and could provide a fresh impetus to India’s economic recovery. Markets and businesses are now keenly awaiting the RBI’s next policy decision, hoping for a move that balances growth support with inflation management.
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