Rate Cut Debate Follows RBI Pause

The Reserve Bank of India’s Monetary Policy Committee (MPC) decided on August 6 to keep the key interest rate unchanged at 5.5%. This pause comes after three consecutive rate cuts—in February, April, and June—amounting to a

total reduction of 100 basis points (1%). The decision to hold rates steady was taken unanimously by all members of the committee.

In a discussion on CNBC-TV18, leading bankers and economists shared mixed views on the likelihood of more rate cuts and gave their projections for growth and inflation. While most do not expect further rate cuts in the near term, a few believe there could be one final cut later this year.

On growth, most forecasts are close to the RBI’s estimate of 6.5%, but inflation views vary more

widely, with projections ranging from 2.6% to 5.2% in the coming quarters.

Below is the rapid-fire Q&A:

Latha Venkatesh: Can we have a rapid fire of whether you all are expecting one more cut, and when?

Ashwini Kumar Tewari, MD–Corporate Banking & Subsidiaries, SBI: Not expecting this year.

Shobhit Mehrotra, Head–Fixed Income, HDFC AMC: One last cut, maybe 25 basis points in October.

Kaushik Das, Chief Economist, Deutsche Bank:So as of now, we don't have any more rate cuts, but I have to read between the lines;

the devil could be in the details. Let you know later.

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank: I am not entirely ruling out, but for the time being, I guess I would say a pause.

Latha Venkatesh: Only for the economists, what is your growth forecast for the current year? The governor says 6.5. You say?

Upasna Bhardwaj: 6.2%.

Kaushik Das: 6.5% this year as well as next year, FY27.

Latha Venkatesh: On inflation, the Governor says 3.1.

Upasna Bhardwaj: 2.6%.

Kaushik Das:We are at 3% this

year, but next year we are at 4.5% with April–June being at 5.2%.

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