New Delhi: Under pressure to bring down retail inflation and keep pace with global peers, the Reserve Bank may go for a 25 basis points hike in the benchmark interest rate, perhaps the last two-percentage point hike in the current monetary tightening cycle that began in May 2022. Is. The monthly policy will be presented on Thursday.
The Monetary Policy Committee (MPC) of the Reserve Bank will meet for three days on April 3, 5 and 6 to take into account various domestic and global factors before coming out with the first bi-monthly monetary policy for the financial year 2023-24. , ,Also Read: Latest Bank Fixed Deposit Rates 2023: ICICI Vs HDFC Vs PNB FD Rate Comparison,
The Reserve Bank of India (RBI) has increased the repo rate by a total of 250 basis points since May to curb inflation, though it has remained above the central bank’s comfort zone of 6 per cent for most of the time. (Also Read:
While firming up the next monetary policy, the two key factors that the committee headed by the RBI governor will deliberate on are high retail inflation and the recent actions taken by central banks of developed countries, especially the US Federal Reserve , European Central Bank and Bank. of England.
After remaining below six per cent for two months (November and December 2022), retail inflation breached the comfort zone warranting action by the Reserve Bank.
Consumer Price Index (CPI) based inflation was 6.52 per cent in January and 6.44 per cent in February.
“I am leaning towards one more final 0.25 per cent hike in rates,” Saugata Bhattacharya, chief economist at Axis Bank, told reporters recently.
He also said that the slowdown in growth currently visible in anecdotal evidence, coupled with some cooling in inflation, should prompt the six-member Monetary Policy Committee to cut rates by the end of Q3FY24 .
“Given that CPI inflation has been 6.5 per cent and 6.4 per cent in the last two months and that liquidity is neutral now, we can expect the RBI to once again hike rates by 25 bps and perhaps to signal that Will change the stance to neutral that the cycle is over,” Madan Sabnavis, Chief Economist, Bank of Baroda had said recently.
In total, the Reserve Bank will hold six meetings of the MPC in the financial year 2023-24. The central government has tasked the RBI to ensure that retail inflation remains at 4 per cent with a margin of 2 per cent on either side.