Chennai, Feb 4 (.) The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is like to press the pause button at its policy meeting being held from February 4- February6, credit rating agency CARE Ratings said.
The repo rate is the rate at which the RBI lends to the banks and it is currently at 5.25 per cent.
“Although inflation projections suggest there is room for another 25-bps rate cut, we believe the MPC will pause and preserve its policy ammunition,” CARE Ratings said.
According to CARE Ratings, retaining this policy flexibility remains important even after recent trade agreements, as the global environment remains uncertain and susceptible to geopolitical flare-ups that could materially impact domestic growth and inflation dynamics.
The February monetary policy meeting is likely to be shaped by a benign inflation outlook, healthy growth momentum, and persistent external headwinds.
“The domestic economic environment remains broadly resilient, and since the December policy meeting, India has concluded four trade agreements – the US, the EU, Oman and New Zealand — to help cushion the impact of global uncertainties, as these will support growth over the medium to long term,” CARE Ratings said.
While these recent trade deals provide some comfort on the external front, the evolving global geopolitical situation continues to warrant close monitoring. In this meeting, we expect the RBI to maintain a status quo on both the policy stance and policy rates, CARE Ratings said. . VJ PPP JRC