RBI may cut rates in 2024 only if food prices decline: IMF Salgado

There is a case for the Reserve Bank of India's Monetary Policy Committee to cut interest rates in the current calendar year only if food inflation comes down faster than expected, according to Ranil Salgado, senior resident representative to India, International Monetary Fund.

"If food inflation comes down faster than we envision, there could be opportunities even in 2024," Salgado told Informist in an interview on Thursday. "But it is contingent on food inflation coming down and mainly headline inflation coming down."

Salgado said the RBI was appropriately cautious in its rate action as food inflation has a major impact on how households set their inflation expectations in India. "They don't want the second-round effect from high food prices to feed into generalised inflation and that's been the history of India," he said.