RBI likely to cut repo rate by 25 bps, change stance to neutral: Zee Business poll

With the Union Budget focusing connected fiscal subject portion supporting consumption, the marketplace is present looking astatine the Reserve Bank of India (RBI) for a imaginable complaint cut. The six-member Monetary Policy Committee (MPC) is expected to trim the argumentation repo complaint by 25 ground points (bps) successful its upcoming argumentation reappraisal connected February 7, according to 80 per cent of respondents successful a Zee Business probe poll.

The home rate-setting sheet has kept the repo complaint unchanged for 11 consecutive meetings aft raising it by 250 bps betwixt May 2022 and February 2023. The past complaint chopped was successful May 2020, during the Covid-19 pandemic.

MPC stance apt to displacement to neutral

According to the poll, 80 per cent of participants expect the MPC to displacement its stance to neutral, allowing for much flexibility successful aboriginal argumentation decisions.

A complaint chopped is anticipated owed to a operation of anemic growth, expectations of declining inflation, and the government’s fiscal prudence. India’s GDP maturation slowed to 5.4  successful Q2FY25, the lowest successful 7 quarters.

Growth and ostentation estimates successful focus

The canvass besides indicates that 60 per cent of respondents expect the RBI to revise its GDP maturation forecast for FY25, which was past chopped to 6.6 per cent successful December from 7.2 per cent earlier.

Similarly, 60 per cent judge the RBI volition update its ostentation projection, which presently stands astatine 4.8 per cent for FY25. Inflation successful December eased to a four-month debased of 5.22 per cent, but nutrient ostentation remained precocious astatine 8.4 per cent.

Key absorption areas successful RBI commentary

Market participants volition intimately ticker the cardinal bank’s stance connected liquidity, guidelines connected Liquidity Coverage Ratio (LCR) norms, and commentary connected unsecured loans. While the RBI announced a 50-bps CRR chopped successful December, experts judge further liquidity measures whitethorn beryllium required for effectual transmission.

As the RBI prepares to denote its archetypal argumentation reappraisal of 2025, each eyes volition beryllium connected first-time RBI Governor Sanjay Malhotra and his appraisal of the economical outlook amid planetary uncertainties.