The Reserve Bank of India’s (RBI) plans to cut the repo rate are expected to be postponed until 2025, following a significant spike in inflation, which reached a nine-month high of 6.83% in September. This unexpected increase in consumer prices has raised concerns among economists and policymakers, signaling that the RBI may need to maintain its current monetary policy stance for an extended period.
Source:- bbc news
The surge in inflation can be attributed to various factors, including rising food and fuel prices, which have heavily impacted the overall price index. Food inflation, in particular, has seen a notable increase, with prices of essential items like vegetables and pulses contributing to the overall rise. Analysts indicate that this inflationary pressure is likely to persist, driven by supply chain disruptions and fluctuating global commodity prices.
Source:- news 18
In light of these developments, the RBI’s monetary policy committee is likely to adopt a cautious approach in its upcoming meetings. The central bank has prioritized maintaining price stability and may hold off on any rate cuts until there is a clear indication that inflation is under control. This cautious outlook is supported by the RBI’s recent statements, which emphasized the importance of addressing inflation concerns before considering any accommodative measures.
Market experts suggest that any potential easing of the repo rate will depend on the trajectory of inflation in the coming months. If inflation remains above the RBI’s target of 4%, it may lead to prolonged high-interest rates, impacting borrowing costs for consumers and businesses alike. As the economic landscape evolves, the RBI’s decisions will play a crucial role in shaping India’s recovery trajectory, balancing growth and inflation concerns as it navigates a complex economic environment.
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