The RBI’s three-day twice-monthly monetary policy committee (MPC) meeting got underway on Wednesday, with participants in the financial markets expecting to closely follow the outcome and the central bank’s stance on policy. In a financial year, the RBI typically holds six bimonthly meetings where it discusses the money supply, inflation outlook, interest rates, and various macroeconomic indicators.
SBI Research predicts that the Indian central bank will again pause the main repo rate this week.
“Domestically, we believe at 6.50 per cent, we are in for a prolonged pause as seasonality of inflation is tapering first…,” SBI Research report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, said recently.
“We believe the (RBI’s) stance should continue to be withdrawal of accommodation as inflation is unlikely to tread below 5 per cent in rest of 2023-24,” the SBI Research report said.
Informerics Ratings also believes that the RBI will maintain the repo rate at its current level for a fourth consecutive time. The US Fed’s continued hawkish stance and sticky retail inflation, which has breached the MPC’s upper threshold of 6%, make it likely that the RBI will leave the repo rate unchanged for a fourth time. The central bank may have slowed the key interest rate due to a relative decline in inflation, barring the most recent spike, and the possibility of further decline. Many nations, including advanced economies, have concerns about inflation, but India has done a good job of controlling its trajectory.