RBI may keep interest rate unchanged for fifth straight time
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is expected to keep the repo rate at 6.5% for the fifth time in a row, reported Moneycontrol citing industry sources. The central bank hasn't changed the rate since February 2023, when the rate was raised by 250 basis points from 6.25% to 6.5%. State Bank of India (SBI) Chairman Dinesh Khara said, "We are expecting the repo rate to be status quo in the upcoming policy."
Inflation eases to five-month low in October 2023
Retail inflation rate dropped to a five-month low in October 2023, with the Consumer Price Index (CPI) falling to 4.87% from 5.02% in September 2023. Although it has stayed within the RBI's 2-6% tolerance range for the past two months, inflation has been above the medium-term target of 4% for 49 consecutive months. Inflation eased due to a favorable base effect and declining prices of certain items. However, the upward trend in onion prices tempered the overall decrease in inflation.
RBI's recent actions indicate unlikely rate cuts
The RBI's recent decision to increase risk weights on consumer credit, credit card receivables, and non-banking financial company (NBFC) exposure suggests that rate cuts are unlikely soon. Speaking to Moneycontrol, Umesh Revankar, Executive Vice Chairman of Shriram Finance, said, "It clearly indicates that the MPC will maintain the repo rate at 6.5%." The MPC is set to meet next from December 6 to 8.
