MPC should wait for more clarity on inflation before deciding on rate cuts

With GST cuts fuelling festive demand and growth holding strong, the RBI's MPC is likely to stay cautious on rate cuts as it weighs inflation risks and uncertain global trade headwinds

The meeting of the six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) this week coincides with the festival season. Initial reports tracking online transactions suggest a significant jump in demand. Although a clear position will emerge in the coming weeks as companies report their monthly and quarterly numbers, the rationalisation of goods and services tax (GST) is likely to have influenced households’ buying decisions. The GST system has been adjusted, mainly to a two-rate structure, which has reduced tax on a majority of items. It will be interesting to see the extent to which this influences