September 18, 2024
New Delhi, India
RBI Interest Rates Decision
The Reserve Bank of India (RBI) is unlikely to lower its benchmark policy rate in 2024 due to persistent uncertainties over food inflation, according to State Bank of India (SBI) Chairman C S Setty. Despite the anticipated rate cut by the U.S. Federal Reserve, Setty believes the RBI will take a cautious stance, prioritizing domestic inflation dynamics.
Key Points:
- Food Inflation as a Concern: Setty highlighted that while the U.S. Fed’s rate cut could influence global central banks, the RBI would focus on food inflation before making any rate decisions. He suggested that a rate cut might not occur until Q4 2025, depending on improvements in food inflation.
- Retail and Food Inflation: Retail inflation in India slightly rose to 3.65% in August from 3.54% in July, still under the RBI’s target of 4%. However, food inflation surged to 5.66%, making it a key factor in the central bank’s decision-making.
- Repo Rate and MPC Stance: The RBI has maintained the repo rate at 6.5% since February 2023. The next Monetary Policy Committee (MPC) meeting is scheduled for October 7-9, where inflation concerns will take center stage.
- SBI Subsidiaries: On the capital front, Setty dismissed any plans to divest stakes in SBI subsidiaries but confirmed readiness to provide growth capital when required.
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