RBI Monetary Policy Committee meeting begins, decision on repo rate on Friday

Mumbai:

The three-day bi-monthly meeting of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) began on Wednesday. The MPC is expected to keep the key interest rate repo unchanged. Reserve Bank Governor Shaktikanta Das will announce the decisions taken by the Monetary Policy Committee on Friday.

Experts believe that the central bank is not expected to cut interest rates (repo), as inflation is still a concern. The repo rate remains unchanged at a high of 6.5 percent from February 2023. Amid the booming economy, it is believed that the MPC will refrain from cutting interest rates.

The central bank last raised the repo rate to 6.5 percent in February 2023 and has kept it unchanged for seven consecutive times since then.

According to an SBI research paper, the central bank should stick to its decision to withdraw the accommodative stance. The report, titled ‘Introduction to MPC meeting’, has expressed expectations that the RBI will cut the repo rate in the third quarter of the current financial year and that “the cut will be modest…”

It also said that consumer price index-based inflation is expected to hover around five percent in May and then ease to three percent in July. Retail inflation figures will be released later this month. It said inflation is expected to remain below five percent from October to the end of fiscal 2024-25.

On RBI’s expectations, Dhruv Aggarwal, Group CEO of Housing.com and PropTiger.com, said India’s economy continued its strong performance and achieved an impressive growth rate of 8.2 per cent in 2023-24, up from seven per cent in 2022. 23.

“In view of this, the RBI MPC is expected to maintain its current policy stance amid prevailing inflationary pressures and the chances of a cut in interest rates this year seem unlikely…” he said.

Anantram Varayur, co-founder of Mansum Senior Living, also hopes that in the next bi-monthly policy, interest rates will either be kept unchanged or cut by the central bank. “We expect these measures to reduce liquidity in the market and increase consumer confidence, which could have a positive impact on real estate sales,” he said.

The government has given the Reserve Bank a target of keeping retail inflation at four percent with a margin of two percent.

Saurabh Rai, CEO of Arhas, said RBI needs to focus on monetary policy to facilitate funding and promotion of geospatial technology, sustainability solutions. The MPC consists of three external members and three RBI officials. External members of Rate Fixing Committee Shashank Bhide, Ashima Goyal and Jayant R. This is Verma.