June 5th 2024.
Mumbai: The Reserve Bank of India's rate-setting panel has begun its three-day meeting to discuss the upcoming monetary policy. Governor Shaktikanta Das is expected to announce the committee's decisions on Friday.
Experts predict that the central bank will maintain the current interest rate as inflation remains a concern. The sustained repo rate of 6.5% since February 2023 may also dissuade the Monetary Policy Committee from cutting rates, especially with economic growth on the rise. The central bank has not altered the repo rate in the past seven consecutive meetings since hiking it to 6.5% in February 2023.
According to a research paper by the State Bank of India, the RBI should continue its current stance of withdrawing accommodation. The report, titled "Prelude to MPC Meeting," also anticipates a rate cut in the third quarter of the current fiscal year, but expects it to be a shallow one. Additionally, the report projects that retail inflation based on the Consumer Price Index (CPI) will remain around 5% in May and decrease to 3% in July. This trend is expected to continue until the end of the 2024-25 fiscal year, with inflation staying below 5% starting in October.
When asked about their expectations for the upcoming policy meeting, industry experts had mixed opinions. Dhruv Agarwala, Group CEO of Housing.com & Proptiger.com, believes that the RBI will maintain its current policy stance in light of the strong performance of India's economy, which grew at 8.2% in 2023-24 compared to 7% in 2022-23. He also believes that given the current inflationary pressures, a rate cut is unlikely this year.
On the other hand, Anantharam Varayur, co-founder of Manasum Senior Living, hopes for measures that will increase liquidity in the market and boost consumer confidence, ultimately leading to higher real estate sales. The government has tasked the RBI with keeping retail inflation at 4%, with a margin of 2% on either side. In April of this year, retail inflation stood at 4.83%.
Saurabh Rai, CEO of Arahas, believes that the RBI should focus on creating a favorable monetary policy that will encourage funding and incentives for geospatial technology and sustainability solutions. This, according to Rai, will not only drive innovation but also contribute to national goals of sustainable development and economic resilience.
The Monetary Policy Committee is comprised of three external members and three officials from the RBI. The external members are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma.
[This article has been trending online recently and has been generated with AI. Your feed is customized.]
[Generative AI is experimental.]
