The report comes after the central bank announced on Friday that it has decided to keep the repo rate unchanged at 6.5%.
Reserve Bank of India (RBI) may wait till August 2024 to hike rates, considering that it is focussed on cutting down inflation to its 4% target, SBI Ecowrap said in a report on Monday.
The report comes after the central bank announced on Friday that it has decided to keep the repo rate unchanged at 6.5%.
“The rate action so far is still working its way into the economy. Hence, the MPC decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth,” RBI governor Shaktikanta Das said in the monetary policy statement.
Going ahead, RBI contends that inflation outlook would be influenced by uncertain food prices. High frequency food price indicators point to an increase in prices of key vegetables, which may push CPI inflation higher in the near-term. In light of this, RBI projects inflation at 5.4% in 2023-24.
Separately, RBI has decided to allow reversal of liquidity facilities under both standing deposit facility (SDF) and marginal standing facility (MSF) even during weekends and holidays with effect from December 30. The move is expected to facilitate better fund management by banks.
“There had been two sets of banks in the market, one resorting to parking funds in SDF and another borrowing from MSF. Ideally there should have been interplay amidst these segments first,” the report said. It added that this asymmetry should also be lessened now as a result of RBI’s measure.
The central bank announced a slew of measures including a unified regulatory framework on connected lending for all regulated entities.
The report noted that the move will enable RBI to regulate the flow, underwriting, exposure and the extent of credit to various entities.
Source:financialexpress.com