BS Poll: Majority sees neutral interest rate between 1% to less than 2%

A debate on real interest rate has picked up steam as the repo rate has been kept unchanged at 6.5 per cent since February 2023 despite inflation prints showing a downward trend

Days after two external members of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee favoured lowering of the policy repo rate, citing high real interest rates, a majority of the respondents to a Business Standard poll said the neutral rate should be between ‘more than or equal to 1 per cent’ and ‘less than 2 per cent’.

The real rate of interest, or the neutral rate, is the difference between the policy repo rate and year-ahead inflation projection.

Bank of Baroda Chief Economist Madan Sabnavis said “…need to have a balance between savings and investment. Savers