RBI Holds the Line on Lending Rates Amid Economic Challenges

The Reserve Bank of India (RBI) is anticipated to keep the key short-term lending rate steady at 5.5% during the upcoming bi-monthly monetary policy meeting. Experts suggest this decision comes despite the looming economic uncertainties and muted inflation trends.

While a few experts believe another rate cut may be on the horizon, the central bank is expected to hold firm as it evaluates the recent rate reductions that have cushioned 100 basis points. The RBI's approach remains cautious, taking into consideration the potential for inflation and ongoing economic growth challenges.

Market observers, including CareEdge Ratings, argue that the previous rate cuts have not been fully transmitted through the economy, and further easing might not be on the cards unless growth concerns escalate significantly. Meanwhile, the Monetary Policy Committee, headed by Governor Sanjay Malhotra, will contemplate these factors in its forthcoming decision.

(With inputs from agencies.)