India’s c. bank likely to hold rates amidst economic uncertainty

The Reserve Bank of India (RBI) is expected to keep interest rates unchanged on Wednesday, with some investors speculating on a shift to a neutral stance. This could pave the way for rate cuts as economic growth slows and global rates decline.

The central bank is likely to maintain the repo rate at 6.5 per cent for the 10th consecutive meeting. Over 80 per cent of economists surveyed by Reuters predict no change in rates, as the RBI has kept the repo rate steady since February 2023.

Twelve economists forecasted a 25 basis-point cut, with one expecting a decrease to 6.15 per cent. Nomura economists stated a 55 per cent chance of a rate cut in October, noting it would be a close decision.

The recent 50-bp rate cut by the US Federal Reserve has led market participants to anticipate the RBI initiating rate cuts sooner, with most now expecting a December cut compared to early 2025.

Attribution: Reuters

Subediting: M. S. Salama