RBI may keep the policy rate unchanged this time also, experts
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Mumbai The Reserve Bank of India may once again keep the policy rate unchanged in the monetary policy review presented this week. The reason for this may be that with the concerns about economic growth gone and it being around eight percent, the Central Bank may now put more emphasis on bringing the inflation to the target of four percent. Experts said this. Also, the Monetary Policy Committee (MPC) of RBI, which decides on the policy rate, can take into consideration the stance of central banks of some developed countries like America and Britain.
These central banks are clearly adopting a ‘watch and wait’ approach regarding policy rate cuts. Switzerland is the first major economy among developed countries to cut the policy rate. At the same time, Japan, the world’s third largest economy, has ended the situation of negative interest rates after eight years. The three-day meeting of the MPC chaired by Reserve Bank Governor Shaktikanta Das will begin on April 3. The monetary policy review will be announced on April 5. This will be the first monetary policy review for the financial year 2024-25.
The sixth meeting of the MPC will be held in the financial year starting from April 1, 2024. RBI last increased the repo rate to 6.5 percent in February 2023. After that, it has been kept unchanged in six consecutive bi-monthly monetary policy reviews. Bank of Baroda Chief Economist Madan Sabnavis said, “Inflation is still in the range of five percent and there is a possibility of a future shock on the food inflation front, in view of this, the MPC will maintain status quo on the policy rate and stance this time too.” Can keep.” He said that there may be a revision in the GDP estimate. Everyone will be eagerly watching this.
Sabnavis said, “Economic growth in the financial year 2023-24 has been much better than expected and hence the central bank will have less concerns in this matter and will continue to focus more on bringing inflation in line with the target.” The economic growth rate stood at 8.4 percent in the December quarter of the financial year 2023-24. The National Statistics Office has revised the GDP growth estimates for the first and second quarters to 8.2 percent and 8.1 percent respectively from 7.8 percent and 7.6 percent earlier.
ICRA Chief Economist Aditi Nair said that with the National Statistical Office raising the GDP growth estimates for the first and second quarters of 2023-24, the growth rate is expected to be more than eight percent for three consecutive quarters and the Consumer Price Index (CPI) will remain above eight percent in February. At 5.1 percent, there is no possibility of change in the policy rate and stance in the upcoming monetary policy review. He said, “ICRA believes that the stance at the policy level is unlikely to change before August 2024.” By that time the situation regarding monsoon will be clear. Along with this, the stance of the US Central Bank regarding economic growth and policy rates will also become clear.
Nair said that in view of all this, the policy rate cut is expected to happen by October this year. This situation will occur when there is no problem at the level of economic growth. Ranen Banerjee, partner and principal economic consultant, PwC India, said overall strong GDP growth in the third quarter, core inflation falling below 3.5 per cent, global rise in crude oil prices, rising logistics costs and political instability globally. Escalating situations in conflicts will be major issues for discussion.
He said, “Although some central banks in emerging economies have started cutting policy rates, the central banks of major economies are still in a state of uncertainty.” The yield (bond) differential between India and the US has narrowed, putting pressure on fund flows. He said, “…there is a strong possibility that the MPC will keep the policy rate unchanged. But there is also a small possibility of a rate cut. Some members of the MPC may vote for a policy rate cut but they are not in the majority.
Disclaimer: IndiaTheNews has not edited this news. This news has been published from PTI-language feed.
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