RBI can't budge on rates due to inflation target: Economists

Published On : 2024-11-20T07:39:40+0530 [ IST ] | Author : Mayur_Tembhare
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Economists expect rates to remain higher for longer with the latestinflation data exceeding RBI's tolerance band ahead of the upcoming monetary policy committee meeting. At the same time FM Nirmala Sitharaman and commerce minister Piyush Goy

Both govt and RBI are talking about their specific objectives and both help to maintain momentum of economy. Govt believes lower rates can spur investment and consumption while RBI's MPC is mandated to set policy rates with the primary goal of controlling inflation.

While lower rates theoretically boost consumption and investment this isn't always observed during low-rate periods Sabnavis said.

Although banks see deposit rates peaking some, including SBI, now expect rate cuts only by February. Radhika Rao senior economist at DBS said: "Episodes of strong unseasonal rains have impacted perishables' costs along with pass-through of import tax hikes on oilseeds. These will push the quarterly inflation

Rao added that fading supply disruptions could align inflation with targets creating a narrow window for rate cuts in early 2025.

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