MPC may break long record of repo rate status quo
MUMBAI, Feb 6 (the CONNECT) RBI is likely to cut repo rate by 25 basis points for the first time in almost five years, Bajaj Broking Research says
The RBI Monetary Policy Committee (MPC) meeting is in progress and will end tomorrow.
The panel has kept the policy repo rate unchanged for the last 11 consecutive meetings after raising it by 250 bps between May 2022 and February 2023.
The Union Budget has prioritized consumption and fiscal discipline, leaving room for the central bank to stimulate growth. With GDP growth slowing to a seven-quarter low of 5.4% in Q2 FY25, a rate cut seems imminent, said Bajaj Broking.
RBI’s recent liquidity measures aim to stabilize the financial system, reinforcing expectations of monetary easing.
CPI inflation for FY26 is projected at 4%, with January likely below 4.5%. December inflation eased to 5.22%, marking four consecutive months above 5%. Food inflation dropped to 8.4% from 9% in November.
The MPC shifted to a neutral stance in October, providing flexibility in policy decisions. Economists expect no change in this stance in February, with a shallow rate cut cycle anticipated.
While the RBI ensures sufficient liquidity, a CRR cut is unlikely in the next policy announcement, as the central bank maintains a supportive financial environment.
