MPC meeting: Chetan Ahya expects RBI to hit pause button on interest rate hike
Chetan Ahya's insights offer valuable perspectives on the monetary policies of central banks and the trajectory of India's services sector exports. His predictions suggest that the RBI will maintain its rates in the near term while considering a rate cut in the first quarter of the following year. Additionally, he expects the US Federal Reserve to maintain a tighter monetary policy, impacting the global economic landscape.
The Monetary Policy Committee (MPC) is likely to maintain the status quo as inflation remains within the comfort zone of the Reserve Bank of India (RBI). After raising rates six times in the current cycle, the MPC took a pause in April.
In a recent interview with CNBC-TV18, Chetan Ahya, Chief Asia Economist at Morgan Stanley, shed light on the Reserve Bank of India's (RBI) approach, as well as the potential alignment between India and the United States in terms of economic trends.
According to Chetan Ahya, the RBI is expected to maintain its current interest rates for the time being. However, he believes that a rate cut may be on the horizon, specifically in the first quarter of the following year.
“We are not expecting another rate hike in our base case. We think that they will get the data points which will be allowing them to take this pause in a longer-term manner and then take a rate cut in the first quarter of 2024,” he said.
This projection suggests that the central bank may adopt a cautious approach in the near term, assessing the economic landscape before making any significant adjustments.
While discussing the monetary policies of central banks, Ahya emphasized the need for the US Federal Reserve to maintain a tighter stance. This perspective indicates that he anticipates the US central bank will continue its efforts to rein in inflation and maintain a more disciplined approach to monetary policy. The actions taken by the Federal Reserve will likely have implications for the global economy, including India.
Ahya also highlighted the potential correlation between services sector exports in India and the United States. Ahya expects India's services sector to mirror the performance of its US counterpart.
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