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Despite the sharp decline in economic growth data and demand from all sides to cut interest rates to keep the economy running at full speed, rate cut will be a challenge for the Monetary Policy Committee (MPC).
According to Nismat, there is little possibility that RBI will cut the interest rates this time too and if this happens then the borrowers waiting for reduction in EMI will be disappointed for the second time in a row. The meeting of the Finance Committee of the Central Bank is going to be held between December 4 and December 6, in such a situation the issue of interest rate has once again become a topic of discussion. These figures were even lower than the GDP growth estimates presented for the second quarter of the financial year 2024-25.
During this period the GDP growth rate was 5.4 percent. In such a situation, the pressure on the MPC of Reserve Bank of India (RBI) to reduce interest rates has increased. Since, bond yields fell last Friday in anticipation of policy easing. The rate setting panel is also facing pressure from the government. Industry Minister Piyush Goyal has suggested that food prices should be kept out of inflation calculations. On the other hand, the Union Finance Minister has also favored that it is necessary to reduce interest rates to increase investment and growth. Of course, it is important to note that monetary policy cannot affect the prices of tomatoes, onions or potatoes. But it could reduce demand and lower overall prices, which could help reduce inflation.
In this matter, an expert from the economic world said that despite weak growth, there is a possibility that RBI will not change the interest rate this week. Price stability will be given priority. We are predicting higher interest rates. We highlighted that the MPC may ease monetary policy due to weaker than expected GDP data in the third quarter, but the timing also depends on the growth and inflation outlook.
At the MPC meeting in October, Nagesh Kumar was the only member among the three newly inducted external members to demand an immediate 25 basis point cut in interest rates. Earlier, members Jayant Verma and Ashima Goyal, who departed in August, had expressed their views for a rate cut. Verma strongly supported the reduction in interest rates. Along with this he said, keeping the rates unchanged weakens India’s growth potential.
Why is there pressure on MPC to cut rates?
GDP growth rate in the second quarter was lower than expected at 5.4 percent, Commerce Minister Piyush Goyal suggested to keep food prices out of inflation, Union Finance Minister said to reduce interest rates to boost investment and growth. sided with.
