The Reserve Bank of India (RBI) is anticipated to keep key interest rates unchanged during its Monetary Policy Committee meeting. Although the RBI faces rising global and domestic risks, including surging crude oil prices and a depreciating Indian Rupee, its focus is likely to remain on inflation.
Experts suggest that the RBI will maintain a policy rate of 6.5% while aiming to keep liquidity tight. While inflation has been driven by food price volatility, there are initial signs of a slowdown in food inflation. Core inflation has remained stable, with some easing observed in August. Liquidity conditions have tightened, leading to elevated borrowing costs.
Stimulating Economic Growth During the Festive Season
Despite these challenges, the RBI is expected to prioritize economic growth, particularly during the festive season. The stable interest rate environment is likely to encourage borrowing, especially for home loans and car loans. The positive economic momentum and lending conditions may lead to increased loan applications in the near future.
While inflation remains a concern, experts do not anticipate further rate hikes by the RBI in this fiscal year. Rate cuts may be considered after the first quarter of the upcoming fiscal year. Overall, the RBI’s decision is expected to support borrowers and stimulate economic activity during the festive season.
