Industry hails RBI’s goal to become model central bank for Global South

NEW DELHI — Industry experts on Friday hailed the status quo stance of the monetary policy, expecting the inflation trajectory to stabilise within the target band of the Reserve Bank of India (RBI), welcoming its goal to become a model central bank for the Global South in the coming times.

The Central Bank has left the key interest rates unchanged in its monetary policy review as it continues to maintain a balance between economic growth and keeping inflation in check.

Sanjeev Agrawal, President of the PHD Chamber of Commerce and Industry, said they are expecting the inflation trajectory to stabilise within the target band of RBI and, thereafter, soften the policy stance of the monetary policy.

“Favourable inflation trajectory and resilient economic growth will create scope for a repo rate cut in the coming times. The continuously accelerating economic growth and softening inflation trajectory, coupled with the status quo in repo rate, will lead to high GDP growth in FY2025,” said Agrawal.

The RBI has also raised India’s GDP growth forecast from 7 per cent to 7.2 per cent for the current financial year (2024-25).

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said that with the economic outlook revised upwards, “we anticipate the RBI will focus on controlling inflation, aiming to bring it under the 4 per cent target”.

An expected above-normal monsoon should help control food prices and bring food inflation under control.

“This would prompt the RBI to perhaps lower interest rates towards the end of CY 2024 thereby further fuelling growth, especially in the real estate sector, particularly benefitting the affordable housing segment,” Baijal noted.

A boost in the kharif production, backed by the forecast of above-normal southwest monsoon, stable rupee and the RBI’s commitment to maintaining stability and orderliness in all segments of finance markets and institutions, will also be favourable for the growth of trade and industry, said experts.

“It is highly appreciable that RBI is strategising to become a model central bank for the global South in the coming times,” said Agrawal.

As FY2023-24 GDP was marked with a significantly high growth of 8.2 per cent, the current financial year is also expected to give such surprises on the back of robust economic activity, recovering private consumption, softening inflation and continued traction in investment activity, the industry experts said.