The Reserve Bank of India (RBI) is likely to go for a pause in interest rate hike decision on June 8, according to a CNBC-TV18 poll of economists. The Monetary Policy Committee of the RBI is likely retain its stance at withdrawal of accommodation, most of the economists said, even as there lay a possibility for a change to neutral.

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A rate cut could possibly be expected down the line, anywhere between October and early next year, but will be dependent on data that comes, they said.

On the GDP front, while most economists assert India’s growth is much stronger than anticipated, they expressed concerns about the uncertainty around El Niño and sticky core inflation across the globe.

This comes ahead of RBI’s Monetary Policy Committee (MPC) meeting next week at a time when India’s growth has been higher than expected and inflation is lower than expected.

CNBC-TV18’s citizens MPC caught up with global experts to deliberate on the issues that are before the RBI and what should be done with rates and with monetary policy.

Following the RBI MPC meeting in April, the central bank increased the real GDP forecast for FY24 marginally to 6.5 percent from 6.4 percent earlier. It had lowered its inflation forecast for the current fiscal year from 5.3 percent to 5.2 percent.

Samiran Chakraborty, Chief Economist for India, Citi, said on CNBC-TV18 on June 2 that India’s central bank is likely to be happy with the growth figures and he won’t be surprised if there is an upward revision in growth.

Nomura Chief Economist, India, Sonal Varma pointed out the need to redraw the inflation trajectory as she expects average inflation for the April to June 2023 quarter of FY24 to be below RBI's projection. She, however, believes the biggest uncertainty is El Nino and what it means for food outlook.

Varma also noted that input cost pressures have reduced and expects inflation projections to be brought down by 10 basis points to lower than 5 percent.

According to Sajjid Z. Chinoy, JP Morgan's Chief India Economist, the first quarter growth is tracking much above global trends versus the estimation of the US recession. Noting that India’s growth is much stronger than anticipated, he said adverse supply shocks from COVID-19 are reversing.

He pointed out that advanced economic core inflation seems to be stuck at 5 percent. He added that sticky core inflation across the globe is sowing the seeds of a recession. According to him, the market is now pricing in some rate action in July.

Former Chief Statistician Pronab Sen explains that weak growth always supports a rate cut and in India, he doesn’t see any signs of weakness in growth currently.

However, weakness in consumption is something to worry about and it should be growing by somewhere around 5.5 percent, he said.

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