RBI to wait for stronger growth signals before rate cut as inflation cools: Economists

THE further softening of the CPI inflation in June to 2.10 per cent -- lowest year-on-year inflation recorded since January 2019 -- gives the Reserve Bank of India (RBI) significant room to manoeuvre but we do not expect an immediate policy pivot in August, economists said on Monday.

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The RBI monetary policy committee (MPC) is likely to hold rates and wait for stronger growth signals — particularly from investment and export activity — before calibrating further action, said Arsh Mogre, economist, PL Capital.

“The current real policy rate of +340 bps (repo at 5.50 per cent vs CPI at 2.10 per cent) is already highly restrictive by both historical and global EM standards. However, the central bank may prefer to validate the durability of food disinflation across July-September and monitor the kharif sowing and rainfall trajectory before signalling the next round of easing,” said Mogre.