There is no possibility of interest rate cut by the Reserve Bank at present.

Mumbai: Despite the insistence of Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal, analysts believe that the Reserve Bank of India (RBI) is unlikely to cut interest rates at this stage.

Given the current high inflation, all calculations will not allow the Reserve Bank to cut interest rates, a banker said. The Reserve Bank takes decisions based on domestic economic growth and inflation data.
Unless inflation stabilizes around the RBI’s target of four per cent, it will be difficult for the Reserve Bank to cut interest rates.

Inflation currently appears to be above 6 percent. Retail inflation stood at a 14-month high of 6.21 per cent in October, while the figure stood at 5.50 per cent in September. Much above the Reserve Bank’s target of four percent.

After peaking at 7.80 per cent in April 2022, inflation has now moderated, but not low enough to allow the Reserve Bank to cut the repo rate, an analyst said.

The meeting of the Monetary Policy Committee of the Reserve Bank is being held from 4 to 6 December.

According to Goldman Sachs, the Reserve Bank will cut the repo rate in March 2025 and by June the repo rate will be reduced by half percent.