📷 Image Credits: CNBC-TV18
The Reserve Bank of India (RBI) is gearing up for its Monetary Policy Committee’s rate decision today, setting the tone for the Indian market. Asian markets are trading mixed, and the Gift Nifty indicates a flat start for the domestic market. Investors are closely watching the RBI’s outlook on inflation and the repo rate. Despite some moderation in inflation, persistent food inflation pressures remain a concern, especially with pulses and vegetables inflation in double digits. Vegetable prices are on the rise following a summer uptick after a mild winter correction, while fuel prices have seen deflation primarily due to LPG cuts.
On the positive side, the forecast of above-normal monsoon brings hope for the kharif season, with wheat procurement surpassing last year’s levels. Additionally, the RBI’s decision to maintain the policy repo rate at 6.50% underscores the importance of sustainable disinflation while preserving growth prospects. The forecast for CPI inflation in 2024-25 is projected at 4.5%, with risks evenly balanced throughout the year.
Furthermore, the RBI’s outlook on industrial metals and global food prices hints at possible challenges ahead for input costs and inflation pressures for firms. On the economic front, the Indian economy is expected to grow at 7.2% for the financial year 2024-25, with a positive medium-term outlook for equity and debt markets. While the current monetary policy may be neutral for financial markets in the short term, the medium-term implications suggest a positive outlook.
In conclusion, the RBI’s focus on liquidity management, customer protection, and outlook on areas like FASTag, NCMC, and loan borrowers signify a holistic approach towards economic stability and growth. As the RBI continues to navigate through challenges like food price inflation, liquidity management, and global economic dynamics, stakeholders await further updates on repo rate decisions and macroeconomic trends.
