The Reserve Bank of India (RBI), in the upcoming Monetary Policy Committee meeting, is likely to pause its stance, said SBI in its latest report. “We expect the RBI to continue the pause stance in upcoming policy…Domestically, we believe at 6.50 per cent, we are in for a prolonged pause, no rate reversal cycle till June ’24 stance,” said SBI in the report.
Read More: Are Rs 2,000 Bank Notes Still A Legal Tender? Check What RBI Said
“We believe the stance should continue to be withdrawal of accommodation as inflation is unlikely to tread below 5 per cent in rest of FY24; as amidst the structural change in liquidity is making its forecasting difficult, it should be looked at with a completely different prism,” it added.
The RBI had kept repo rate unchanged at 6.50 per cent for four consecutive times, after cumulatively increasing it by 250 bps from May 2022 to December 2022.
The SBI report added that growth continues to remain resilient and risk is mostly from sources outside of home. Higher oil prices pushing up inflation, and tighter global financial conditions are key risks weighing on the currency, inflation and growth dynamics, it added.
All scheduled commercial banks’ (ASCBs’) credit grew as credit grew by 20.6 per cent. As per sectoral credit data of October 2023, personal, services, agriculture, MSME reported excellent credit growth on-year.
Read More: Ayodhya Airport To Be Ready By Dec 15, Flight Operations to Begin Before January Ceremony
While housing, commercial real estate grew over 35 per cent on-year, aviation reported growth of 67 per cent on year. “Overall, industry credit reported growth of 6 per cent. However, sectors such as chemicals, metals, textile, glass, food processing etc. reported double digit growth. In infrastructure, road reported 9 per cent growth while telecommunication and railway reported growth of 7 per cent each,” stated the report.
Wheat sowing deficit decreased to 5 per cent for the week of November 24. However, sowing of major wheat, pulses and some oilseeds have been slightly delayed this year due to late harvest of kharif-grown paddy in a few states due El Nino’s adverse effects.
“Despite the government’s efforts to increase MSP, mandi prices remain low in ragi, moong and cotton. However, interestingly, the price of cotton at e-NAM is higher than MSP,” stated SBI.
SBI stated that CPI inflation is expected to come around 5.4-5.5 per cent by March 2023, although November and December inflation could overshoot 6 per cent. “With inflation expected to come down further, MPC is likely to maintain the status quo this fiscal,” it said.
