The RBI’s Monetary Policy Committee (MPC), headed by governor Shaktikanta Das, started its three-day meeting on Wednesday amid expectations of a status quo on the rate front in its bi-monthly monetary policy review. The policy review will be announced on Friday.
In the case of a status quo, interest rates for retail, as well as corporate borrowers, would remain stable. Experts believe that the Reserve Bank will retain the benchmark rate at 6.5 per cent given the elevated inflation and global factors.
The Reserve Bank started increasing the policy rate in May 2022 in tranches, in the wake of the Russia-Ukraine war and took it to 6.5 per cent in February this year. Since then, it has kept the rate unchanged in the last three successive bi-monthly monetary policy reviews.
“The credit policy this time will most likely continue with the existing rate structure as well as policy stance. Hence, the repo rate will be retained at 6.5 per cent with the stance of withdrawal of accommodation,” opined Madan Sabnavis, chief economist, Bank of Baroda.
He further said retail inflation is still high at 6.8 per cent and was expected to come down sharply in September and October, but there is still some pessimism on Kharif output especially relating to pulses which has the potential to push up prices further.
“But as the inflation trajectory is downwards, a rate hike can be ruled out. However, we may have to wait for a longer time for the MPC to cut the repo rate,” he said.
PTI
