Lucknow Press
The middle class is disappointed due to no major announcements regarding income tax in the announcements of Budget 2024. The middle class, disappointed with the budget, is now looking towards the Reserve Bank with hope. It hopes that this time RBI will give them some relief from high interest rates by cutting the repo rate.
However, exports have little hope that RBI can give any relief this time too. However, whether relief will be given or not will be known only on August 8. RBI’s monetary review meeting is starting from August 6 and the results will be announced by the Governor of the Reserve Bank on August 8.
RBI monetary review meeting
The Reserve Bank of India (RBI) may once again keep the key policy rate repo at 6.5 percent on Thursday. Experts have predicted that the central bank may wait for more macroeconomic data before cutting the rate. The US Federal Reserve has decided to maintain the status quo on its interest rate for the time being and has indicated that monetary policy may be eased in the coming months.
The curtain will be lifted on interest rates on August 8
Experts said that RBI will closely monitor the US monetary policy before changing its stance on interest rates amid continued inflationary pressure. The Monetary Policy Committee (MPC) may also refrain from cutting rates, because even if the interest rate is raised to 6.5 percent (repo rate), economic growth is good. The MPC meeting headed by Reserve Bank Governor Shaktikanta Das is scheduled to be held between August 6-8. Das will announce the decision of the rate setting committee on August 8 (Thursday). Bank of Baroda Chief Economist Madan Sabnavis said, “We hope that RBI will maintain the status quo in the upcoming policy review. Inflation remains high at 5.1 percent today and will decrease numerically in the coming months, but it will remain high due to the base effect.
Expert’s Opinion
ICRA Chief Economist Aditi Nair said that high growth in FY2023-24, coupled with inflation of 4.9 percent in the first quarter of the current financial year, is creating a stance in favour of maintaining the status quo. He said that there seems to be no scope for a change in stance or rate cut in the August 2024 meeting. He said that if food inflation becomes favourable in the absence of a good monsoon and global or domestic shocks, then a change in stance is possible in October 2024.
After this, interest rates may be cut by 0.25-0.25 per cent in December 2024 and February 2025. Pradeep Aggarwal, Founder and Chairman of Signature Global (India), also said that the central bank is expected to maintain the status quo on interest rates, as retail inflation continues to pose challenges.
