RBI Likely To Hold Repo Rate Steady In Next Policy Meet, Cut Expected in Feb: Report

An HDFC study projected that rural demand is expected to recover in the second half of the fiscal year. The bank's optimism is based on solid agricultural performance, payouts under government schemes

According to the report, these activities have the potential to stimulate economic growth

Source : PTI

HDFC Bank forecasts that the Reserve Bank of India (RBI) will maintain the repo rate at 6.5 per cent during its final monetary policy committee (MPC) meeting of the year, scheduled for next week, according to a report by the country's largest private sector bank.

“We anticipate that the RBI will maintain the current policy rate at its meeting next week, although the likelihood of a rate cut in the February policy has increased post this weaker-than-expected data,” the bank said. 

The latest Gross Domestic Product (GDP) data, released on Friday, revealed that the GDP growth for Q2 FY25 slowed to 5.4 per cent year-on-year, compared to 6.7 per cent in Q1.

At the same time, an HDFC study projected that rural demand is expected to recover in the second half of the fiscal year. The bank's optimism is based on solid agricultural performance, payouts under government schemes, and increased government spending.

According to the report, these activities have the potential to stimulate economic growth.

“A recovery in rural demand – driven by strong agricultural performance and government scheme payouts, along with increased government spending, is expected to drive economic activity in the second half of the (fiscal) year,” the study noted.

Meanwhile, on October 9, RBI Governor Shaktikanta Das announced that the central bank had decided to maintain the key repo rate at 6.5 per cent. This marked the 10th consecutive time since the rate was increased to 6.5 per cent in February 2023, with no change made. The repo rate is the rate at which the RBI lends to commercial banks.

Additionally, the RBI shifted its stance to "neutral," signalling the possibility of a rate cut in future monetary policy decisions. The next decision of the RBI MPC will be announced on December 6, 2024.