RBI’s wait-and-watch stance prudent, Dec rate cut not assured: Report

New Delhi:  The wait-and-watch policy of the RBI on the monetary policy is prudent, a report said on Tuesday, adding that the bank’s dovish tone suggests further easing, but a December rate cut is not “a done deal”.

While any further rate cut by the RBI will depend on growth conditions, the depth of further rate cuts may be extremely limited and hence the RBI may also want to retain the powder dry for now, the report from Yes Bank said.

The report maintained that the tone of the policy remained dovish, which signalled further easing, possibly as early as December.

Despite the current inflation trending at less than the lower bound of the RBI tolerance level and expectations of a 2.6 per cent inflation for FY26, the RBI did not alter its monetary policy rate and stance at the last meeting in October.

The policy statement also noted that tariff risks to growth must be weighed against recent fiscal measures, prompting the MPC to wait for more data before making a decision.

Yes Bank retained its headline CPI forecasts at 2.3–2.4 per cent for FY26 and 4.1–4.2 per cent for FY27. The bank acknowledges that central bank is probably weighing the risks of excessive easing and then risking a fast turn if inflation were to surprise higher

September CPI decreased to 1.54 per cent year-on-year from 2.07 per cent in August. Month-on-month CPI was recorded at 0.1 per cent, while food inflation fell to -0.5 per cent in September.

Consolidated fuel inflation dropped by 0.3 per cent sequentially, with LPG remaining flat and electricity falling by 0.7 per cent month-on-month.

Core inflation, excluding fuel, light, pan, and tobacco, was higher at 0.6 per cent (on-month) in September compared to 0.4 per cent in August, influenced by rising prices in gold and personal care items.

–IANS