SBI Advocates Rate Cut Amidst Benign Inflation Outlook
A recent SBI study suggests the Reserve Bank of India should reduce its benchmark lending rate by 25 basis points in the upcoming monetary policy. With retail inflation expected to remain low, the State Bank of India argues a rate cut is justified to maintain economic stability.
- Country:
- India
The State Bank of India's latest research report has urged the Reserve Bank of India (RBI) to consider a 25 basis point reduction in the key benchmark lending rate. The call comes as retail inflation is poised to remain low even in the next financial year, providing a rationale for the proposed rate cut.
Having already trimmed the repo rate by 100 basis points since February, the RBI paused rate reductions in August amid falling consumer price index (CPI) inflation. The RBI's Monetary Policy Committee will convene from September 29 to deliberate its interest rate strategy, with a decision expected on October 1.
The SBI report, authored by Soumya Kanti Ghosh, notes that lower CPI figures, aided by GST rationalization, support further rate cuts. Despite potential communication challenges, the study emphasizes the importance of proactive monetary policy to sustain economic growth.
(With inputs from agencies.)
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