RBI economists back pause on rates as inflation cools, growth stays strong

Core Viewpoint - Majority of economists are advocating for a reduction in policy rates due to lower inflation and strong economic growth, with a consultative meeting held by the Reserve Bank of India (RBI) to discuss these views [5][7]. Economic Indicators - Retail inflation has remained below the RBI's 4% target for seven consecutive months, recorded at 2.7% in August [5][7]. - The economy experienced a growth rate of 7.8% in the April-June quarter, surpassing expectations [5][7]. Monetary Policy Context - The RBI has already implemented a significant easing of monetary policy, including a half-percentage-point repo rate cut and a one-percentage-point reduction in the cash reserve ratio [6][7]. - The RBI maintained a neutral stance in its August meeting, keeping the policy rate unchanged at 5.5% after a previous cut [6][7]. Future Expectations - Economists from institutions like State Bank of India, Barclays, Nomura, and Morgan Stanley are predicting a quarter-percentage-point rate cut in the upcoming policy meeting [7]. - The next monetary policy committee meeting is scheduled for September 29, with the rate decision to be announced on October 1 [7].