Mumbai: Reserve Bank of India (RBI) Governor Sanjay Malhotra has stated that India’s macro-economic indicators are currently showing positive trends. He noted that the economy remains stable, with several key indicators performing better than expected.
Governor Malhotra also clarified that there is scope for a reduction in policy rates, and early signals in this direction had already been hinted at during the October Monetary Policy Committee (MPC) meeting.
However, he emphasised that the final decision on whether rates will actually be cut will be taken only in the December MPC meeting. This means that investors and markets will have to wait until December for a clear verdict.
Rupee Movement Considered Normal
Speaking on the Indian rupee, the Governor mentioned that an annual depreciation of 3 to 3.5 percent is considered normal and natural. This movement is influenced by global currency trends and external economic conditions. The RBI, he said, is closely monitoring the situation, and if economic indicators continue to display strength, the likelihood of a rate cut in the upcoming policy review could increase further.
Chances of a Rate Cut Strengthen
Global brokerage firm Morgan Stanley has projected that the RBI’s Monetary Policy Committee may cut the repo rate by 25 basis points in its next meeting. According to their report, consumer price inflation (CPI) has remained consistently below expectations in recent months, strengthening the probability of a rate cut. If implemented, this reduction would bring the repo rate down to 5.25 percent.
The next MPC meeting will be held from December 3 to 5 under the leadership of Governor Malhotra. This potential rate cut is seen as significant, particularly because the central bank kept policy rates unchanged in its August and October meetings.
Earlier, between February and June, the RBI had reduced the repo rate from 6.5 percent to 5.5 percent, totaling a 100-basis-point cut. Markets are now eagerly awaiting the December policy outcome.
