The Reserve Bank of India will cut interest rates just once this year, most likely in October-December rather than next quarter, although there was no clear majority among economists polled by Reuters on the timing of the first move.
With a growing likelihood many major central banks, including the U.S. Federal Reserve, delay cutting interest rates, there is little upside for the RBI to step in front.
With near-8% growth, the fastest among major world economies, and above-trend inflation there is also little urgency for the RBI to begin cutting rates unless concerns emerge about a slowdown.
All but one of 72 economists in a May 17-30 Reuters poll expected the RBI to hold the repo rate at 6.50% (INREPO=ECI) at the conclusion of its June 5-7 meeting, just a few days after election results are due.
"Taking a leaf out of the global monetary policy playbook, the RBI too is likely to err on the side of caution and adopt a significantly restrained approach to rate cuts," said Aditi Gupta, an economist at Bank of Baroda.
"Given how the domestic growth and inflation dynamics have been placed, we do not foresee a possibility of the RBI preceding the Fed."
Nearly half of economists surveyed, 33 of 71, predicted the RBI's first repo rate cut would take place in Q4 2024, giving a median forecast of 6.25%. In April, the most popular choice for the first cut was Q3.
By end-2024, 33 of 71 said rates would be 25 basis points lower at 6.25%, 15 said 6.00%, and five expected 5.75% or lower. The remaining 18 forecast no rate change this year.
Those predictions come despite widespread expectations inflation will stay above 4%, the mid-point of the RBI's preferred 2%-6% range, this year and next.
At 4.83% in April, inflation is expected to dip to 4.00% next quarter before rising in subsequent quarters, the poll showed, averaging 4.5% this fiscal year and next.
Economic growth was forecast to average 6.8% this fiscal year and 6.6% next.
"With the still-robust growth outlook creating no urgency to cut rates and inflation still above target, driven mainly by food ... we do not expect the majority of the MPC to see a reason to cut before December," Shreya Sodhani of Barclays noted.
While a smaller number of forecasters provided rate views well into next year, median forecasts showed no further cuts beyond 6.00%.
(For other stories from the Reuters global economic poll:)
