look news india
Mumbai: After the US Federal Reserve cut interest rates by half a percent, the country's bankers, industries, investors and borrowers are now looking forward to the Reserve Bank of India (RBI) meeting next month.
While the Federal Reserve has already started cutting interest rates in Britain, Canada and the Eurozone, industries, especially the auto industry, and borrowers are hoping that the Reserve Bank will do the same. The Reserve Bank has maintained the interest rate at 6.50 per cent till February 2023.
Inflation remained below the RBI's target of four per cent in July and August. Retail inflation was 3.54 per cent in July and 3.65 per cent in August. A banker said that given inflation remaining below the target level and a good monsoon in the current year, the RBI will start reducing interest rates in the October meeting. However, given the high level of food inflation, the RBI will start with a 5 per cent cut, he opined.
Brokerage firm Nomura predicts that the RBI will cut the repo rate by one percentage point a year to a total of 5.50 per cent by mid-2025 after starting to cut interest rates at its October meeting. Considering the difference between economic growth rates and inflation calculations in the US and India, the Reserve Bank is unlikely to follow the Federal Reserve, a stockbroker said.
SBI Chairman C.S. Shetty had predicted in an earlier interview to PTI that interest rates would not be cut in 2024. He has come to this assumption keeping in mind food inflation.
The meeting of the Reserve Bank's Monetary Policy Committee (MPC) is being held between 7 and 9 October. Sources in the Federation of Automobile Dealers Association (FADA) said that keeping in mind the slowdown in vehicle sales and huge inventory in the country, it is necessary to reduce the interest rate. At the end of August, the number of unsold autorickshaw vehicles has reached 7.80 lakh, whose total value is Rs 77800 crore.