Yes Bank stated that the RBI will assess global commodity prices before making a decision on a rate cut.

New Delhi [India], October 7: As the Reserve Bank of India's (RBI) ongoing meeting garners attention, experts generally believe that the central bank is unlikely to announce any changes to the repo rate during this session.

However, a recent report by Yes Bank indicated that before deciding on a rate cut, the RBI is expected to assess risks related to global commodity prices and inflationary pressures in the United States. Specifically, concerns regarding tariff policies and their effects on global supply chains may influence the RBI's interest rate decisions.

The report stated, "We believe that the RBI will consider risks stemming from global commodity prices and US inflation (tariff walls and their impact on global supply chains) before making a decision on rates."

While a rate cut is anticipated in the coming months, the RBI is expected to carefully evaluate several global and domestic factors before taking any action.

The report also indicated that when the RBI starts cutting rates, the process is likely to be gradual, with reductions estimated to be in the range of 50 to 75 basis points (bps). This suggests that the RBI may prefer a cautious approach, opting for smaller, spaced-out cuts instead of making significant reductions all at once.

Additionally, the report highlighted that in the August policy meeting, the RBI pointed out potential risks to food inflation, especially from weather events like La Nina. Excessive rainfall, which could harm crops, was noted as a factor that might further drive up food prices.

These weather-related risks necessitate careful monitoring, as recurring food price shocks have hindered the overall pace of disinflation in the economy.

Considering these factors, it is widely believed that the upcoming policy decision may be premature for implementing rate cuts. The report remarked, "The upcoming policy may be a tad too early for deciding on the same."

According to the report, the RBI appears to be focused on closely monitoring these external and internal risks before taking any action. Therefore, while no immediate changes are expected, the likelihood of a rate cut in the near future remains strong, with December being a significant meeting to observe for potential monetary easing.