The RBI’s next Monetary Policy Review to be held in February is expected to cut interest rates. SBI Chairman CS Shetty has indicated this in a conversation with Business Today’s Managing Editor Siddharth Jarabi at an annual meeting of the World Economic Forum in Davos, Switzerland.
He said that this step can be taken due to the slow pace of the new governor and the slow pace of economic growth. SBI chairman estimates that there may be a repo rate of 50 to 75 basis points in 2025.
Repo rate cut possible
Our house view is that there will be a small cut in February, which will indicate that the central bank is ready for it. The entire calendar is possible to cut 50 to 75 basis points in the year 2025, including a cut of 25 basis points in February.
In the last Monetary Policy Review meeting held in December, the RBI had kept the policy rate stable at 6 and a half percent time in a row for the 11th consecutive time. But now confidence is being expressed that in the next meeting to be held between 5 to 7 February, the reduction in the interest rate may be announced.
Its purpose will be to increase cash flow in the banking system. Talking about the status of the rupee, Setty said that from April 2021, the rupee has been associated with the dollar index. The rupee has declined when the dollar has strengthened.
Interest rate deduction is now necessary
SBI chairman says that the rupee is performing better in the currency of emerging economies. The current situation is different from the time of the global financial crisis of 2008. The dollar index rose 3-4% from 2014, but the rupee fell by 45%.
Regarding the economic recession, Setty believes that this is a temporary phase. He said that investment in sectors like steel and cement is decreasing from estimates. However, investment is being invested in renewable energy, roads and other areas. But core investment is important, we hope that the budget will encourage it.
Setty has described it as stronger about the condition of the banking sector. He says that the banking system has strengthened the balance sheet, we have adopted the technology along with improving the underwriting processes and efforts are also being made to reduce the operating cost.