After taking over as RBI Governor in December 2018, for the first four years, Dr. Shaktikanta Das' image was of surprising the market and the public regarding interest rates. That is, many times he reduced interest rates when expectations were low and increased them when it was not expected, but for the last two and a half years, he has not been doing anything surprising in this regard.

MPC will give its decision

In the last nine meetings of the Monetary Policy Committee (MPC) headed by RBI Governor Dr. Das, it has been decided to keep the interest rates stable. On Wednesday (October 09, 2024) also, the MPC will give its decision after three days of deliberation and no expert is confident that Dr. Das will make any change regarding interest rates in India.

There was a change in repo rate in 2023

The repo rate, which affects the rates of home loans, auto loans and other loans of the general public, was last changed in February 2023. Currently it is 6.50 percent. Dheeraj Reilly, MD and CEO of HDFC Securities, says, "There is very little hope of any cut in the repo rate, but it is possible that the attitude of the RBI Governor regarding the trend of interest rates in the future may have changed. That is, till now he has been talking about keeping the interest rates stable but this indicates that a reduction in interest rates is possible in future.''

early signs of recession

Dheeraj Relli says that mixed signals are being received at the global and domestic level. Some initial signs of recession are also being received. However, the inflation rate has not been very volatile for the last four quarters and it is close to the target set by the central bank. Due to this, it is expected that RBI will also reduce its estimate regarding the inflation rate.

There are five members in MPC

It should be noted that apart from the RBI Governor, there are five more members in the MPC. Three of these members are appointed by the Central Government. Last week, the Finance Ministry has appointed three new members Dr. Nagesh Kumar, Prof. Ram Singh and Saugata Bhattacharya. According to the report of MK Global Financial, it will take some time for the three new members to form their opinion but the time to cut interest rates has probably not come yet.

These factors have to be taken care of

Right now, there are some negative signals about the domestic economy. Also, before reaching any decision, the issues of recession in America, increasing trade conflict between America and China, and the ongoing instability regarding the US elections will also have to be kept in mind. Anyway, despite the high interest rates, the pace of debt in the country remains high. According to the report of MK Global, the RBI Governor may indicate that there may be a softening of interest rates from December 2024.