Wait and watch

Global uncertainty demands caution on monetary policy

- 

The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is meeting this week for the final time this financial year. This is also its first meeting since Sanjay Malhotra assumed office as governor. Market participants will closely watch the outcome of the meeting on Friday, as it comes soon after the Union Budget. Several analysts believe this is the right time to begin the easing cycle, primarily for two reasons. First, growth in the Indian economy has slowed considerably. The First Advance Estimates of the statistics department for the current year shows the economy will grow by 6.4 per cent compared to 8.2 per cent in 2023-24. Second, given the government has done well on the fiscal front in terms of containing expenditure, it is time for the RBI to support growth with lower interest rates.