New Delhi: Ahead of the meeting of the 6-member monetary policy committee (MPC) of the Reserve Bank of India (RBI), an SBI Research report has said that the central bank is expected to yet again pause the key repo rate.

The RBI is expected to keep the repo rate unchanged at 6.5 percent, said the SBI Research report.

“Based on all the scenarios, RBI may keep the repo rate unchanged at 6.5%, although control in CPI demands the lower repo rate but taking all factors together, this is the time of status quo…AS SUCH, FIRST RATE CUT NOT BEFORE Q2’FY25 (as of now),” the report said.

The report said that it expects pause stance in upcoming policy stating, “Downward revisions in US non-farm payroll, higher GDP growth expectations, decline in inflation, excess savings still to the tune of $ 1 trillion seem to have pushed back on market expectations for a quick pivot to rate cuts. Domestically, we believe at 6.50%, we are in for a prolonged pause, no rate reversal cycle till Jun’24.”

It cited risk for growth mostly from outside home sources

“Growth continues to remain resilient. Higher oil prices pushing up inflation and/or tighter global financial conditions are the key risks weighing on the currency, inflation and growth dynamics.”

The three-day MPC meeting Chaired by RBI Governor Shaktikanta Das unanimously decided to keep the repo rate at 6.5 percent in October.

The RBI Governor added that Das said that considering the economic factors, the MPC has estimated the GDP growth rate to be 6.5 percent in the financial year 2024.

“As far as inflation rate is concerned, the MPC’s forecast is 5.4 per cent for 2023-24, taking into account various domestic issues including potential agricultural output,” he added.