The Reserve Bank of India Governor-headed six-member Monetary Policy Committee’s (MPC) meeting is scheduled on August 8-10. The policy decision will be announced on August 10 by Governor Shaktikanta Das.
Experts feel that RBI is likely to continue with the pause on the key interest rate at its upcoming monetary policy review, as concerns on the inflation front and keeping the borrowing cost stable to maintain the economic growth momentum persist.
The borrowing cost, which started rising in May last year, has stabilised with the RBI keeping the repo rate unchanged at 6.5 per cent since February when it was raised from 6.25 per cent. Later, in the two bi-monthly policy reviews in April and June, the benchmark rate was retained.
Also Read: Will Your Loan EMI Go Up From September? How Experts See RBI’s BIG Meeting This Week?
Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers, said, “Further rate hikes in India are unlikely, with current inflation 50 basis points lower than the long-term average and the country’s existing policy rate 50 basis points higher than the 10-year average. Retail inflation in India, on the other hand, has been significantly higher than projected in the last month, and major price pressures are noticeable for certain categories, particularly in the food category. At the same time, India’s economic statistics remain optimistic. As a result, another 25 basis point rate hike in India is not completely ruled out.”
“We believe that the MPC will conduct at least another review to evaluate whether the inflationary risk is much higher than previously expected. The repo rate remains unchanged at 6.5% since February and is likely to continue the same till the next calendar year,” Hajra added.
LIC Housing Finance Managing Director Tribhuwan Adhikari too said the central bank is unlikely to tinker with interest rates and maintain the status quo in the upcoming monetary policy review.
The interest rate is likely to remain stable in the near term, Adhikari said.
Umesh Revankar, Executive Vice Chairman, Shriram Finance, said, “The inflation level has been staying within the tolerance limit of below 6%. Consequently, in the upcoming MPC recommendations, we expect RBI to continue with their stance of pausing policy rate hikes for the next interest cycle. Having said that, inflation in various countries such as the United Kingdom is still a cause of worry. Hence, it is still imperative that we monitor and rein in domestic inflation. The Government of India has taken the right step by banning exports of non-basmati rice in a bid to cool down consumer price inflation.”
“With respect to credit measures, we expect that the central bank will take steps to bolster credit availability and foster an enabling financial ecosystem. India’s farmer community, having had to face the brunt of an uneven monsoon, can expect some financial assistance or relaxation in credit norms. We are confident that the RBI will strike a fine equilibrium between sustaining economic growth and ensuring price stability,” Revankar added.
The government has tasked the central bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side. The central bank factors in the CPI to arrive at its bi-monthly monetary policy decision.
India’s retail inflation based on Consumer Price Index (CPI) rose to a three-month high of 4.81 per cent in June, mainly on account of hardening prices of food. The inflation, however, remains within the RBI’s comfort level of below 6 per cent. The inflation data for July will be released on August 14.
The MPC consists of three external members and three officials of the RBI. The external members of the panel are Shashanka Bhide, Ashima Goyal and Jayanth R Varma. Besides Governor Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).
RBI MPC Meeting Dates August 2023
August 8-10. The policy decision will be announced on August 10.
Comments
0 comment