The Reserve Bank of India (RBI) is unlikely to cut the key interest rate repo in its bi-monthly monetary policy review meeting this week. Experts have expressed this opinion. They say that retail inflation still remains a matter of concern, and the West Asia crisis is likely to worsen, which will affect crude oil and commodity prices. Earlier this month, the government reconstituted the rate-setting committee of the Reserve Bank of India (RBI) - the Monetary Policy Committee (MPC). The reconstituted committee with three newly appointed external members will begin its first meeting on Monday.

The decision will come on October 9

MPC Chairman RBI Governor Shaktikanta Das will announce the results of the three-day meeting on Wednesday (October 9). The Reserve Bank of India has kept the repo rate unchanged at 6.5 percent since February 2023. Experts believe that there is scope for some relaxation in December itself. The government has tasked the central bank to ensure that the Consumer Price Index (CPI) based retail inflation remains at four percent (plus or minus two percent). In the current perspective, experts believe that the RBI will likely not follow the US Federal Reserve, which has reduced benchmark rates by 0.5 percent.

There is little hope of change in RBI's stance.

The RBI will also not follow the central banks of some other developed countries, which have reduced interest rates. Bank of Baroda chief economist Madan Sabnavis said, "We do not expect any change in the repo rate or the stance of the MPC. This is because inflation will remain above five percent in September and October and the current low inflation is due to the base effect. Apart from this, core inflation is rising gradually." Sabnavis said that apart from this, the recent Iran-Israel conflict may deepen further, and there is uncertainty here. Therefore, the status quo is the most likely option even for new members.

No change expected in GDP estimates

The inflation forecast may be lowered by 0.1-0.2 percent and the gross domestic product (GDP) forecast is unlikely to change. The central bank last raised the repo rate to 6.5 percent in February 2023 and since then, it has maintained the rate at the same level. ICRA Chief Economist Aditi Nair said that given the GDP growth forecast to be lower than the MPC's estimate in the initial first quarter and retail inflation to remain low in the second quarter, we believe that it may be appropriate to change the stance to 'neutral' in the policy review of October 2024. He said that after this the repo rate may be cut by 0.25 per cent in December 2024 and February 2025. Signature Global (India) Ltd. Founder and Chairman Pradeep Agarwal said that home buyers along with the real estate industry and developer community are expecting a cut in interest rates, but the central bank will probably keep the interest rates unchanged for the tenth consecutive time.