New Delhi, October 09, 2024
Taking various factors into consideration the MPC has projected real GDP growth for 2024-25 to 7.2%. This number remains unchanged from the last projection. Also, taking various factors into consideration, the CPI inflation for 2024-25 has been projected at 4.5%, the same as projected in the previous policy.
Governor Shaktikanta Das announced the central bank’s decision on policy rates in the RBI’s concluding day MPC meeting on Wednesday. “The Flexible monitory policy framework has completed 8 years. This is major structural reform, “ Mr. Das said in a statement.
The RBI announced a balanced monetary policy, opting to keep interest rates unchanged while shifting its stance to neutral. The overall tone remained positive from the market’s perspective. While there was no explicit mention of a rate cut, subtle cues in the governor’s speech hint at the possibility of a rate reduction in upcoming policies, said Santosh Meena, Head of Research at Swastika Investmart.
“RBI’s decision to hold rates while changing the stance to neutral is completely in line with our expectations. The tone of the Governor remains fairly balanced keeping further decisions data dependent. We continue to expect the onset of rate easing from December with a 25bps cut but the scale of easing in this cycle is expected to be shallow with limited scope for back-to-back easing in each policy. Said ” Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.
Over the last couple of weeks, the 10-year benchmark G-sec yields have risen by around 10 basis points due to these factors. However, if these global challenges prove temporary, we might see a rate cut in the next policy cycle. In this context, long-term bonds with current yields look attractive, and investors may want to consider locking them in, especially if global tensions ease and domestic economic indicators remain stable, said Suresh Darak, Founder of Bondbazaar.
“The RBI’s shift to a ‘neutral’ stance marks a pivotal step in its approach, providing more flexibility in navigating the evolving economic conditions. With food inflation easing and the monsoon being favorable, this change signals optimism for India’s inflation outlook. Globally, trends such as the US Federal Reserve’s rate cut and easing monetary policies further support this shift. By adopting a more neutral position, the RBI is positioning itself to respond dynamically to future developments, while continuing to foster economic stability and long-term business confidence.”Said Anu Aggarwal, Head of Corporate Banking, Kotak Mahindra Bank