The GDP growth forecast for India seems to be in a positive direction as per the IMF forecasts. The CPI inflation number as of February 2024 also happens to be at 5.09 % which is within the RBI inflation range of 2 % to 6%. However , the inflation rate is close to the upper range of 6 percent and the geopolitical uncertainties still weigh heavily on global growth through fragile supply chains. We also have the Indian elections around the corner. With this background, we expect the rbi to keep a neutral stance with no change in interest rates, as the RBI would like to see some more certainty with which the macro economic variables would move before taking a rate decision in either direction. We expect a rate cut only in the third quarter of this year, if at all the rate cut has to happen but not before that.
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