More Liquidity support: we expect the RBI to continue addressing the liquidity deficit through additional measures.
FinTech BizNews Service
Mumbai, February 6, 2025: There has been a lot of curiosity about upcoming RBI policy. Amar Ambani, Executive Director, YES SECURITIES, presents his views on it:
“We do not anticipate the RBI cutting rates in the upcoming policy meeting. While inflation is showing signs of easing and domestic growth requires support, global conditions remain unfavourable for a rate cut at this stage. With China imposing retaliatory tariffs on the US, the RBI is likely to adopt a wait-and-watch approach regarding further developments in the trade war. Shipping costs are already elevated, and an immediate rate cut could widen the interest rate differential between the US and India, exerting additional pressure on the INR, which has already seen significant depreciation. The inflationary impact of this depreciation is yet to fully materialize. Moreover, the US Federal Reserve is unlikely to cut rates before April/May 2025.
The case for supporting growth will only gain traction once INR stability is ensured. Having said that, on the growth front, the RBI has already provided liquidity support through a CRR cut and OMOs, while the recent Union Budget introduced measures to boost consumption.
In the first policy meeting under the new Governor, we expect the RBI to continue addressing the liquidity deficit through additional measures. We see a possibility of a shift in policy stance from the current ‘neutral’ position to ‘accommodative’. This will offer enough reason for the Indian stock market to rejoice.”
