Mon Dec 02 22:11:23 UTC 2024: ## RBI Likely to Hold Interest Rates Steady in December Meeting
**New Delhi:** The Reserve Bank of India (RBI) is expected to maintain its repo rate during its upcoming bimonthly monetary policy review meeting scheduled for December 4-6, 2024. This decision comes despite expectations for a rate cut, primarily due to retail inflation remaining above the RBI’s comfort level of 6%.
Experts predict that the six-member Monetary Policy Committee (MPC), headed by Governor Shaktikanta Das, will announce its decision on December 6th. While many anticipated a rate cut, the current inflation rate, exceeding 6%, limits the RBI’s options. The repo rate has remained unchanged at 6.5% since February 2023, and experts now suggest a rate cut may not occur until February 2025.
The RBI faces the challenge of balancing economic growth with inflation control. The recent GDP growth slowdown, with Q2 figures dipping to 5.4% (a two-year low), and weaker-than-expected corporate performance, adds to this complexity. Several economists, including Upasna Bharadwaj of Kotak Mahindra Bank, have revised their GDP growth forecasts for FY2024-25 downwards, citing weak corporate performance. Aditi Nayar of ICRA expects no change in interest rates in December but forecasts a potential cut in February 2025, contingent on a decrease in retail inflation over the next two months.
Madan Sabnavis of Bank of Baroda suggests maintaining the repo rate is the most prudent approach, given global uncertainties and the current retail inflation rate of 5.9%. The prevailing view among analysts is that the MPC will adopt a “wait-and-see” approach in this meeting. The RBI increased the repo rate by 250 basis points between May 2022 and February 2023 before pausing rate hikes.
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