RBI Repo Rate: Wait for reduction in interest rates may be long
RBI Repo Rate: RBI Governor Shaktikanta Das will inform about the decisions of the MPC on August 8. The US central bank Federal Reserve has decided to maintain the status quo on its interest rates in the meeting held last week. It has also indicated that monetary policy may be relaxed in the coming months. The MPC may also refrain from cutting the rate.
The wait for those who reduce interest rates may be longer. Experts have predicted that the RBI may once again maintain the repo rate at 6.5 percent in the Monetary Policy Committee (MPC) meeting to be held this week. Experts say that the central bank may wait for more macroeconomic data before cutting the repo rate. The MPC meeting will be held from August 6-8.
RBI Governor Shaktikanta Das will inform about the decisions of the MPC on August 8. The US central bank Federal Reserve has decided to maintain the status quo on its interest rates in the meeting held last week. Also indicated that monetary policy may be eased in the coming months. Experts say that amid inflationary pressure, the RBI will closely monitor the US monetary policy before changing its stance on the interest rate.
The MPC may also refrain from cutting rates. The reason for this is that even though the interest rate has been raised to 6.5 percent (repo rate), economic growth has remained good. Bank of Baroda Chief Economist Madan Sabnavis has expressed hope that the RBI will maintain the status quo in the upcoming policy review.
Inflation remains high at 5.1 percent today and will come down numerically in the coming months, but it will remain high due to the base effect. ICRA Chief Economist Aditi Nair said that high growth in FY 2023-24, coupled with inflation of 4.9 percent in the first quarter of the current financial year, is favoring maintaining the status quo. He said that there seems to be no scope for a change in stance or rate cut in the August meeting.
