'No possibility of rate cut': Ex-SBI chief Rajnish Kumar ahead of RBI's MPC decision 

Former State Bank of India chief and current Mastercard India Chairman, Rajnish Kumar, said that there is no chance of a rate cut but there is no reason for a rate increase either, ahead of Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) meeting announcements on Friday. The MPC meetings started on December 6.

“I am hoping there will be no change in the repo rate, that’s my expectation but if you look at all the numbers and the scenario then there is no possibility of a rate cut and at the same time there is no reason that there will be a rate increase…so same, status quo,” said Rajnish Kumar to Business Today. 

Kumar’s assessment is in line with other experts who believe that the central bank will keep the repo rate unchanged this time too for the fifth consecutive time. 

SBI, too, in a report stated that India is in for a prolonged pause. “We expect the RBI to continue the pause stance in upcoming policy…Domestically, we believe at 6.50 per cent, we are in for a prolonged pause, no rate reversal cycle till June ’24 stance,” said SBI in a report. It had added that the stance should be withdrawal of accommodation as inflation is unlikely to tread below 5 per cent in rest of FY24. 

The RBI had kept the repo rate unchanged at 6.50 per cent for four consecutive times, after cumulatively increasing it by 250 bps from May 2022 to December 2022.

ICICI Securities’ Chief Economist Prasenjit Basu said that with CPI inflation moderating at 4.87 per cent on-year in October 2023 and core CPI inflation at 4.5 per cent on-year, they expect RBI to keep policy repo rate unchanged in the December MPC meeting. Basu also said that there is a possibility of MPC moving into a neutral policy stance due to easing inflationary pressures. 

Union Asset Management Company’s Head of Fixed Income, Parijat Agrawal, said that the MPC is expected to bring inflation to the 4 per cent target but nevertheless it is expected to maintain its pause on rate and stance. 

Umesh Revankar, Executive Vice Chairman, Shriram Finance said, “While the inflation numbers over the last few quarters have been encouraging, we agree with the RBI’s view that our economy is still not out of the woods. Accordingly, we expect the MPC to maintain the repo rate at 6.5 per cent as it aims to stabilise inflation around the 4 per cent medium-term target by controlling the liquidity in the system. We further anticipate no rate cuts till the beginning of the next fiscal year.”

Also read: RBI MPC meet: Central bank expected to keep repo rate unchanged at 6.5%

Also read: ‘We are in for a prolonged pause’: SBI on RBI’s upcoming policy meeting from Dec 6-8