According to State Bank of India (SBI) chairman CS Setty, the Reserve Bank of India (RBI) is not expected to lower the benchmark policy rate in 2024 due to the uncertainties surrounding food inflation. It is anticipated that the US Federal Reserve would soon lower interest rates for the first time in more than four years, prompting central banks in other nations to do the same.

Many central banks are accepting separate calls on interest rates. Setty, who just took over the bank’s leadership, told PTI in an interview that although the Fed rate drop will have an impact on everyone, the RBI would consider the inflation of food before making a decision on an interest rate decrease.

He said, “That is our opinion, and we also believe that the rate cut during the current calendar year may not occur; most likely, we will have to wait until Q4 (2025, January through March) unless there is a significant improvement in food inflation.”

The RBI Governor Shaktikanta Das is the leader of the Monetary Policy Committee (MPC), which will meet from October 7–9 to decide on interest rates. Retail inflation increased slightly to 3.65% in August from 3.54 percent in July, a figure that the rate-setting panel, the MPC, is considering when making its decision. The rate of price increase in the food basket was 5.66 percent in August, even though overall inflation remained below the RBI’s median objective of 4 percent. In its August bi-monthly review, the RBI left the repo rate at 6.5% unaltered due to the possibility of rising food inflation. This was the eleventh MPC meeting in a row when the decision was made to keep the rates where they are.

Since February 2023, the Reserve Bank has maintained the benchmark repo rate in its current form. Two external members advocated for a rate drop at the last meeting, while four of the six MPC members decided to maintain the status quo. Governor Das of the Reserve Bank of India similarly said earlier this week that a long-term inflation trend would be used to determine interest rate moderation rather than monthly statistics. Regarding the monetisation of SBI’s interest in a few of its subsidiaries, Setty said that at this time, there is no consideration of selling any of the subsidiaries’ interests.

“We will certainly investigate if these subsidiaries need (growth) capital,” he said. He said that none of the major subsidiaries now need funding from the parent company in order to expand. The bank gave SBI General Insurance Company Ltd. an extra Rs489.67 crore in capital during the 2023–24 fiscal year.