Reserve Bank of India's Monetary Policy Committee (MPC) meeting scheduled for April 5, 2024, foreign brokerages and banks have weighed in on the likely trajectory of the repo rate for the fiscal year 2025.
Goldman Sachs, Morgan Stanley, and Barclays, among others, have collectively forecasted that the MPC might maintain the repo rate at its current level of 6.5% in the initial half of the fiscal year.
According to projections by Goldman Sachs Research and Morgan Stanley Research, the RBI may consider implementing two 25 basis points rate cuts during the latter half of the calendar year. Specifically, Goldman Sachs Research has envisaged one rate cut each in the quarters of July-September 2024 and October-December 2024.
Santanu Sengupta, Chief India Economist at Goldman Sachs India, emphasized the importance of inflation trends, stating, “With 1HCY24 headline inflation still above the RBI’s target, we maintain our view that the RBI will keep the policy repo rate unchanged at 6.5 per cent at the April 5 meeting."
Meanwhile, Upasana Chachra, Chief India Economist at Morgan Stanley, adjusted their earlier forecast, anticipating the first rate cut to occur between August and September, rather than June as previously predicted.
Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics at Barclays, echoed similar sentiments, pointing out the prevailing economic landscape marked by robust growth and declining core inflation. Bajoria anticipates the MPC to uphold the repo rate at 6.5%, maintaining its stance focused on the gradual withdrawal of monetary accommodation.
Alexandra Hermann, a lead economist at Oxford Economics, highlighted the cautious approach likely to be adopted by MPC members, citing factors such as persistent headline inflation above 5% and robust Q4 GDP figures.
While the downward trend in core inflation offers encouragement, Hermann suggested that MPC members might exercise prudence, awaiting clearer indications of a sustained trajectory towards the 4% inflation target.
Follow us
