Foreign banks anticipate that the Reserve Bank of India (RBI) will keep its policy rate unchanged at 6.5% during the upcoming Monetary Policy Committee (MPC) meeting from October 7-9. This meeting will be notable as it introduces three new external MPC members appointed for four-year terms.
HSBC predicts a shift in the RBI's stance from a hawkish 'Withdrawal of accommodation' to 'neutral', citing recent softer growth numbers, declining inflation, and a global pivot from rate hikes to cuts. They foresee potential repo rate cuts of 25 basis points in both December and February, bringing the rate down to 6%.
Barclays also expects the RBI to maintain its current policy rates, with at least one dissenting vote likely from the new members. They suggest that by December, sufficient data may indicate easing inflation pressures, paving the way for a rate cut.
DBS Bank highlights that the RBI's focus on controlling food price inflation and managing inflationary expectations may lead to a pause in October, with a possible shift in stance by December, particularly in light of geopolitical tensions.
Since February 2023, the RBI has held the repo rate steady at 6.5%.