RBI Navigates Economic Prelude Amid Tariff Tensions - Monetary Policy Anticipations
The RBI's Monetary Policy Committee, led by Governor Sanjay Malhotra, is deliberating the next bi-monthly monetary policy amid US tariff impositions. Experts speculate on rate cuts, but expect a cautious stance due to macroeconomic factors, with inflation below 4% and industry players watching for potential policy impacts.
- Country:
- India
On Monday, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, commenced its three-day discussions to determine the forthcoming bi-monthly monetary policy. The deliberations come at a crucial time amid speculations of a possible pause in the rate easing cycle.
Having commenced the rate-cutting trajectory in February, the RBI has lowered the repo rate by 100 basis points in stages. Experts anticipate the central bank may resort to a status quo, particularly following the US's announcement of a 25% tariff on Indian imports, effective this week.
Broader economic factors continue to play a significant role, with inflation having consistently dipped below 4% since February, reaching 2.1% in June. The industry remains divided, with some advocating for a 25 basis points cut to support MSMEs amidst heightened tariff challenges. Notably, the previous rate cuts' incomplete transmission serves as a backdrop for expected cautious optimism in the policy pronouncement.
(With inputs from agencies.)
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