The Reserve Bank is still battling inflation, and everyone is waiting to see whether rates will be lowered in 2024

 The Reserve Bank is still battling inflation, and everyone is waiting to see whether rates will be lowered in 2024

The Reserve Bank is still battling inflation, and everyone is waiting to see whether rates will be lowered in 2024

Furthermore, according to some experts, a rate drop is probable when consumer price inflation (CPI) falls below 4 percent in the middle of 2024.

The Reserve Bank is still battling inflation, and everyone is waiting to see whether rates will be lowered in 2024.

The Reserve Bank of India (RBI) chose to retain interest rates for the fifth consecutive policy review in 2023, citing the risk of inflation. Additionally, when prices started to decline, everyone was reminded of the dangers associated with food inflation as well as the goal of achieving core consumer price inflation of 4%.

With the US Federal Reserve's instructions for reducing rates and the emphasis on action by a member of the Monetary Policy Committee (MPC), everyone is waiting to see when the RBI will drop rates as we approach the new year. Furthermore, according to some experts, a rate drop is probable when consumer price inflation (CPI) falls below 4 percent in the middle of 2024.

In the last year of his second three-year tenure as governor of the Reserve Bank of India, Shaktikanta Das has remained unwavering in his emphasis on the need of bringing inflation down to 4 percent on a sustained basis.

In October, the CPI dropped to a four-month low of 4.87 percent; but, in November, it increased to 5.55 percent. Das said that "relaxing rates is not at all under consideration" until inflation is controlled or stays below 4% for a sustained length of time, after the announcement of the December monetary policy review.

He said in December that the future was "very volatile" and that any shock may completely destroy the economy.

Only when inflation hits the target zone for a "sustainable period" will the policy stance be reevaluated, according to Das, who had previously said that it would remain "accommodative" throughout the year.

The central bank's warnings about possible problems from food inflation are all the more valid in light of the episodic increase in inflation in the second half of the year brought on by the surging costs of tomatoes and onions.

It is the responsibility of the Monetary Policy Committee (MPC) to maintain inflation at 4 percent, plus or minus 2 percent.

The central bank will carefully monitor the incoming government's activities after the general elections in order to determine its policy rate and liquidity plans.

Das, who is in his sixth year as governor, assumed leadership of the organization at a turbulent period after his predecessor Urjit Patel's abrupt departure on December 11, 2018, and his subsequent management of the epidemic.

Das has received recognition for his leadership from all across the globe and was this year's nominee for the Best Central Banker Award.

With the exception of their persistent disagreement over cryptocurrency, Mint Road and North Block maintain friendly ties under the direction of the former bureaucrat who is now a central banker.

Additionally, Das has recognized threats to the financial system and, starting in May 2023, has taken a number of steps to address bank boards and management. He informed them that attempts to provide evergreen loans, clever accounting techniques to boost earnings, and shortcomings in corporate governance had all been discovered during the central bank's routine inspections.

Many see the mid-December notice prohibiting banks from lending to companies purchasing shares in alternative investment funds (AIFs) as a response to these worries.

The central bank issued a letter in November to drastically raise the risk weight on unsecured loans, endangering the credit markets and particularly non-bank lenders, after warnings about a possible risk build-up in this area. Something has been stirred. have been handling the loan underwriting.

The regulator said that it would soon stop approving loans to high-profile corporations that haggle for low-rated related organizations.

The HDFC twins' massive merger is confirmed to go through without a hitch by the central bank.

In addition to robust institutions, the challenge posed by contemporary institutions engaged in loan operations persists beyond 2023. Experts predict that as long as there are fresh efforts to rig the game, these kinds of activities will only get more widespread.

The government has been appreciative of the central bank's policy for the previous several years, as they have pushed digital payments architecture all year long and even made it a major theme during their G20 presidency.

In order to get Central Bank Digital Currency (CBDC) to a critical mass in terms of volume, the RBI would also concentrate on marketing it in the next year.