The Monetary Policy Committee (MPC) meeting will start on August 8 and the changes, if any, will be announced on August 10.
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The Reserve Bank of India (RBI) may keep the status quo (the current state) on the key interest rates for the third time, according to reports. While the US Federal Reserve and the European Central Bank have raised benchmark rates, it is believed that the RBI will refrain from hiking interest rates in the upcoming bi-monthly policy review.
Experts suggest that domestic inflation remains within the RBI’s comfort zone, and the last two bi-monthly policy reviews, held in April and June, retained the benchmark rates. The cost for borrowers began to rise in May last year and the RBI chose to maintain the repo rates at 6.5%, which increased to 6.25% in February.
The Monetary Policy Committee (MPC) meeting will commence on August 8, with RBI Governor Shaktikanta Das announcing the policies on August 10. The MPC comprises six members, headed by the RBI Governor. The Committee convenes every two to three months, and the RBI Governor announce the changes, if any, during a press conference on the third day of the meeting.
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Madan Sabnavis, Chief Economist at Bank of Baroda, said, “We do expect the RBI to maintain a status quo position on both rates and stance. Presently, inflation is running at less than 5 per cent, but there could be some upside risk in the coming months due to the increasing prices of vegetables and pulses. Therefore, an extended pause is expected.”
Sabnavis also noted that the RBI had an inflation rate of 5.4% for the third quarter and it appears that the repo rate or stance might change by the beginning of the next calendar year. On Thursday, the European Central Bank announced a new rate increase of a quarter per cent point, bringing its main rate to 3.75%.
Meanwhile, Upasna Bharadwaj, Chief Economist at Kotak Mahindra Bank, stated, “On the policy front, we expect the RBI to maintain its current stance of ‘withdrawal of accommodation’ now that liquidity conditions have improved following the announcement of the withdrawal of the Rs 2,000 note.”
The Investment Information and Credit Rating Agency (ICRA) Chief Economist Aditi Nayar predicts that the Consumer Price Index (CPI), or retail inflation, is expected to surpass 6% by the end of the month.
