Reserve Bank may keep the repo rate unchanged for the seventh consecutive time today
Mumbai: Given the strong economic growth rate and high inflation, the Monetary Policy Committee (MPC) of the Reserve Bank of India is expected to keep the repo rate unchanged for the seventh consecutive time at the end of its three-day meeting tomorrow. Rising crude oil prices and predictions of heat wave have become a matter of concern for the Reserve Bank.
Most of the bankers and analysts who participated in the survey conducted by a private firm have expected the interest rate to be 6.50 percent.
After increasing the repo rate to 6.50 percent in February 2023, the Reserve Bank has kept the interest rate unchanged in every next meeting. A banker said, RBI will not cut interest rates before July.
An economist said that keeping in mind the Lok Sabha elections, high inflation rate and strong economic growth rate, the MPC does not consider it appropriate to cut the repo rate at present.
India’s economic growth rate in the December quarter of 2023 was 8.40 percent, which was the highest among major economies. Apart from this, the inflation rate in February was also higher than expected at 5.09 percent. Which is much higher than the Reserve Bank’s target of 4 percent.
Reserve Bank Governor Shaktikanta Das had earlier said that it would be premature to cut the repo rate until inflation comes down to around 4 per cent.
India’s GDP is strong, but not up to its potential. The MPC’s first review meeting of the new fiscal year began on April 3 and the MPC will announce monetary policy tomorrow at the end of the three-day meeting.
From May 2022, the interest rate has been increased by a total of 250 basis points (two and a half percent) to 6.50 percent.
The recent heat wave forecast and rising crude oil prices have raised concerns for the Reserve Bank and its efforts to reduce inflation are likely to be prolonged.
Quoting another analyst in the report, it has been said that the decision to cut the repo rate can be taken after monitoring the progress of monsoon and crop irrigation in July.
