The Reserve Bank of India is probably going to maintain its pause position at the next meeting of the Monetary Policy Committee, as per the State Bank of India. The dates of the next RBI MPC meeting are February 6–8.
According to its most recent analysis, it anticipates that the RBI would maintain its pause position in the next policy...Strong US wages and non-farm payroll data appear to have dampened market hopes for a swift switch to rate decreases.First rate reduction scheduled for June 24th... Now, August 24 seems like the greatest option.
For the fifth time in a row, the RBI had maintained the repo rate at 6.50 percent in December. The six-member rate-setting panel reached a unanimous decision to maintain the repo rate at its current level for the fifth time overall, following a 250 bps increase from May 2022 to December 2022.
Additionally, the MPC maintained its policy position, emphasizing the removal of accommodations in December. According to the most recent SBI report, the withdrawal of accommodation should remain the stance.
According to the SBI research, CPI is predicted to be between 4.6% and 4.8% in FY25 and 5.4% to 5.4% in FY24. Although there was a notable slowdown in inflation in 2024 compared to 2014, the fundamental makeup was unchanged. The contribution of food has not changed over time, it stated. Retail inflation in India rose from 5.55 percent in November to 5.6% in December.
In December, the CPI inflation rate in India decreased by 210 basis points to 5.6% from its April 2022 level. Three sectors of the core CPI—household goods, apparel and footwear, and transportation and communication - accounted for 80% of the overall fall in the weighted contribution during the same period, when it fell by 159 basis points.
It stated that the liquidity shortfall has grown since the previous RBI MPC in December.
Since mid-September 2023, the net liquidity asset facility (LAF) has been in a deficit mode. As of December 2023 policy, the system liquidity deficit is Rs 2.3 lakh crore, with an average of Rs 1.8 lakh crore. Nevertheless, following the Dec. 23 policy, the government's excess cash reserves have grown to an average of Rs 3.97 lakh crore. The excess of durable/core liquidity has decreased to Rs 1.8 lakh crore due to a decrease in system liquidity and an increase in government surplus cash holdings, the report stated.
