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RBI MPC May Repo Rate in October: The Reserve Bank of India may cut interest rates. Rating agency S&P Global has predicted a cut in interest rates in the October monetary policy meeting in view of the stability in the country's GDP growth.
Interest rates unchanged in nine meetings
S&P Global Ratings has maintained its GDP growth forecast at 6.8 percent. RBI's MPC meeting will be held on 7-9 October, in which a decision can be taken on the issue of reducing interest rates. After raising the repo rate to 6.5 percent about one and a half years ago, no change was made in the interest rates in the last nine meetings. RBI MPC has not changed the rates since February 2023.
Fed rate cuts boost prospects
The US Federal Reserve cut interest rates by 0.5 percent amid hopes of improvement in the US economy. After the Fed's soft stance, the possibility of RBI also adopting a soft stance and cutting interest rates has increased.
GDP growth will be 6.9 percent
In the new economic outlook for Asia-Pacific, S&P has retained its GDP growth forecast at 6.9 per cent in FY2025-26. India's weak GDP growth in the June quarter was due to low urban demand due to high interest rates. GDP growth recovered to 8.2 per cent in FY2023-24.
It is impossible to maintain inflation at 4 percent
According to the report, the central government has set a target to bring down the fiscal deficit to below 4.5 percent of GDP in the financial year 2025-26. At the same time, it is impossible to maintain inflation at the level of 4 percent. Inflation is expected to be lower at an average rate of 4.5 percent due to challenges related to climate change.