The Reserve Bank of India (RBI) is all set to conclude its Monetary Policy Committee (MPC) meeting today. With all eyes on RBI Governor Shaktikanta Das’ address, analysts expect the central bank to raise interest rates by 25 basis points (bps) in order to control inflation and maintain growth.
The three-day long MPC was held from April 3 to 6, 2023, making it the first meeting of the new fiscal year (FY2023-24) and the second one of the calendar year. Before this, in the February meeting as well, RBI maintained its hawkish stance and increased the repo rate by 25 bps, taking it to 6.50 per cent.
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At this point, the rising levels of retail inflation have become more worrisome since it rose 6.44 per cent year-on-year (Y-o-Y) in February, continuing to stay out of RBI’s tolerance limit. While overall inflation has been a tricky territory for the central bank, the retail inflation numbers are particularly important for this MPC.
In addition to this, other factors like unseasonal rains leading to some crop damage and a surprise call by OPEC+ nations to cut oil production, could further having a bearing on RBI’s decision as it could add to inflation.
Apart from analysts, even a Reuters poll suggested that a majority of respondents (20 of 36) expect the RBI to maintain its ‘withdrawal of accommodation’ stance. However, the other 16 expect the central bank to shift to a ‘neutral’ stance. Please note that the exact outcome of RBI MPC would be know after 10 am.
