RBI Expected to Keep Policy Rates Unchanged in October Meeting: Bank of Baroda Report
The Reserve Bank of India (RBI) is likely to maintain its current policy rate and stance for the tenth consecutive time in its October meeting, according to a report by the Bank of Baroda (BoB).
Inflation and Policy Rates
Despite inflation falling below the target of 4% for the past two months, the RBI is expected to wait for more clarity on inflation trends before making any changes. The recent drop in inflation was due to a ‘positive base effect,’ and the RBI is cautious about the volatility in food prices.
The Monetary Policy Committee (MPC) will announce its decisions on October 9. A rate cut might be possible in December if inflation remains stable.
Economic Outlook
The report suggests that India’s economy is projected to grow by 7.3-7.4% in FY25. While some sectors like manufacturing and vehicle sales have shown signs of slowing down, the services sector continues to expand.
In the last MPC meeting, the RBI decided to keep the policy rates unchanged at 6.5% due to persistent concerns about inflation.
Doubts Revealed
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India, which means it controls the money supply and interest rates in the country.
Policy Rates -: Policy rates are interest rates set by the RBI to control the economy. They affect how much it costs to borrow money from banks.
Bank of Baroda -: Bank of Baroda is one of the largest public sector banks in India. It provides banking and financial services to people and businesses.
Inflation -: Inflation is when the prices of goods and services go up over time. It means you need more money to buy the same things.
Rate Cut -: A rate cut is when the RBI lowers the policy rates. This makes borrowing money cheaper, which can help boost the economy.
FY25 -: FY25 stands for Fiscal Year 2025. It is a one-year period used for accounting and budget purposes, starting from April 1, 2024, to March 31, 2025.
