Mumbai: The recent change in the monetary policy of the Reserve Bank of India has not suddenly changed, but the softening in the expectations of domestic inflation has been an important reason behind it. According to the latest report of the State Bank of India, the central bank is now taking decisions not only on the current data, but also by sensing the direction of the future. SBI says that a glimpse of softening in the policy is actually a response to signs that the common people are now expecting less inflation. This has brought the RBI to bring flexibility in the policy to promote development.
SBI studied five examples from 2018 to 2024 and found that changes in RBI's stance have often been associated with the ups and downs of inflation. Whenever expectations increased, the policy became strict, and when there was a decline, then the RBI has taken the path of softness.
Base of change in monetary policy
The report said that the recent soft trend of RBI is to the descending expectations of common families regarding inflation of domestic families. It is estimated that the inflation rate may remain around 8.9 percent in the next three months. This change gives the central bank an opportunity to cut interest rates and support development.
Policy transmission and future direction
By February 2025, the repo rate has been cut by a total of 50 basis points. Public banks decreased deposit rates by 6 BPS, foreign banks reduced by 15 BPS, while private banks recorded a slight lead.
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Despite this, new loan rates in all bank groups showed the impact of RBI's policy rapidly. This makes it clear that the impact of the policy is happening in the right direction and in a timely manner. Despite all these differences, weighted average lending rates (WALR) on new loans for public sector banks, private banks and scheduled commercial banks have closely followed the policy rate changes. This shows that the overall transmission of monetary policy remains effective and timely. Thus the SBI report emphasizes that the RBI policy is both responsible and visionary to real -time development, which aims to balance inflation control with economic growth.
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