RBI MPC: Expectations for a rate cut fade amid risks of inflation, say economists
RBI MPC
RBI MPC: Governor of the Reserve Bank of India Shaktikanta Das has stated that he is unwilling to think about loosening policies unless inflation regularly stabilizes around the 4% objective.
It is anticipated that the Reserve Bank of India (RBI) would keep interest rates where they are at its next monetary policy meeting (RBI MPC) on Friday. For the sixth straight meeting, the central bank is expected to maintain its benchmark repurchase rate at 6.5%, according to all 38 analysts polled by Bloomberg. In spite of the government’s alert about an approaching heat wave and stronger-than-anticipated economic expansion, most analysts believe the central bank will continue to exercise caution. Some people think, nevertheless, that it might allude to future rate reductions.
UPI TRANSACTIONS SOAR BY 56% WHILE TICKET SIZE AVERAGE DROPS BY 8%
The possibility of loosening monetary policy, however, is hampered by worries about rising food costs and signs of strong demand in an economy growing at a rate of about 8%. Governor of the Reserve Bank of India Shaktikanta Das has stated that he is unwilling to think about relaxing measures until inflation steadily settles around the 4 percent objective, which will lessen the chance of an impending rate decrease.
Repo Rates Likely To Remain Unchanged
RBI MPC: The RBI is anticipated to maintain its current interest rate, uphold the monetary policy stance of “withdrawal of accommodation,” express confidence in growth prospects, and reaffirm its commitment to achieving the 4 percent headline inflation target, according to Santanu Sengupta, the India economist for Goldman Sachs Group Inc.
The US Federal Reserve’s potential decision to defer cutting interest rates provides some respite for the RBI. The RBI frequently keeps an eye on Fed policies, much like other central banks in emerging countries, in order to preserve stability in its currency exchange rates.
RBI’s Cautious Strategy
An economist at Bloomberg claims that the RBI is being overly cautious in its approach. “The RBI is taking a more aggressive stance than is necessary. The economy requires a boost. Growth is reducing. As retail food prices reflect declining agricultural expenses, food prices are expected to drop precipitously by year’s end. The RBI doesn’t need to wait for the Fed because FX reserves are rising, the economist added.
