RBI's Monetary Strategy: Balancing Growth and Inflation

The Reserve Bank of India is expected to keep policy rates unchanged at its upcoming MPC meeting, as highlighted in an SBI report. With inflation levels still high, a rate cut seems unlikely. The report suggests a neutral monetary stance to support growth and proposes recalibrating liquidity strategies.

The Reserve Bank of India is anticipated to maintain its policy rates in the forthcoming Monetary Policy Committee meeting set for December 4-6, according to a document from the State Bank of India. With inflation still unsettling, the chance of an immediate rate reduction is deemed improbable.

The SBI report emphasized the importance of sustaining a neutral monetary approach, supporting economic growth without drastic policy changes. It noted that the previous meeting's removal of the 'withdrawal of accommodation' stance had established a basis for growth support. The report forecasts a potential rate cut in February 2025.

As India's economy faces gradual growth deceleration and geopolitical uncertainties, the report advises against immediate rate cuts despite anticipated inflation moderation from November. Instead, it recommends nuanced liquidity management strategies over a sweeping reduction in the Cash Reserve Ratio.

(With inputs from agencies.)