The Reserve Bank of India (RBI) is unlikely to cut interest rates until mid-2024, as inflation is expected to remain elevated in the near term. This is according to traders and analysts, who say that the RBI will need to see a sustained decline in inflation before it can start to ease monetary policy.
Inflation in India has been on the rise in recent months, reaching a 15-month high of 6.3% in June. This is due to a number of factors, including rising food prices and higher fuel costs. The RBI has raised interest rates twice this year in an attempt to cool inflation, but these hikes have so far had little effect.
Traders and analysts say that the RBI is likely to keep interest rates on hold until inflation starts to come down. They say that the RBI will need to see inflation fall below 6% before it can start to consider cutting rates. This is likely to take several months, as inflation is expected to remain elevated in the near term.
The RBI’s decision to keep interest rates on hold is likely to disappoint businesses and consumers, who were hoping for a rate cut to boost economic growth. However, the RBI is likely to be more concerned about taming inflation, as high inflation could hurt the economy in the long run.