Ahead of the monetary policy review from February 5-7, Reserve Bank of India (RBI) Governor Sanjay Malhotra has convened a meeting on January 22 with industry captains, including heads of apex industry chambers of commerce. 

This meeting — described as a pre-policy interaction— assumes significance as it would be the first one after Malhotra assumed the role of RBI Governor on December 2024, industry sources said. 

It comes at a time when the Indian economy is faced with challenges of a slowdown and falling consumption. At the upcoming meeting, India Inc is expected to pitch for policy rate cut even as economists opined that RBI would continue to pause on policy rates given the inflation situation and need to prioritise liquidity enhancement over rate cuts. 

The last time the RBI had cut policy rate to 6.5 per cent was in February 2023. 

Indications are that the upcoming January 22 meeting will be attended by the top brass of CII (Confederation of Indian Industry), FICCI (Federation of Indian Chambers of Commerce & Industry), PHDCCI and ASSOCHAM. 

Inflation, other issues

Given the inflation compulsions and new geopolitical developments including pressure on the rupee, RBI is widely expected to remain on pause at the February 5-7 review, although more measures to improve liquidity are likely in the offing, a top public sector bank chief said on the condition of anonymity.

Meanwhile, Standard Chartered Bank Global Research has pushed back its call for 50 basis points of repo rate cuts to April-June from February-April. “We now expect a cumulative 50bps of repo rate cuts to be delivered at the April and June monetary policy meetings, instead of in February and April,” said Anubhuti Sahay, Head, India Economic Research, Standard Chartered Bank, India.

Standard Chartered Bank Global Research sees the headline liquidity deficit in India widening further to ₹2-2.5 trillion and the core to switch to a deficit of ₹1-1.5 trillion by March 2025. “Given that a tight liquidity scenario would conflict with the RBI’s stated ‘neutral’ monetary policy stance, we think the central bank is likely to prioritise liquidity-enhancing measures rather than a repo rate cut at the February meeting. We expect another 50 basis points reduction in CRR at the February meeting,” Sahay added in a recent research note.