Business

RBI Monetary Policy Today: Will MPC Increase Reverse Repo Rate? What to Expect

February 10, 2022
Bharat Times English News

The Reserve bank of India will close its Maharashtra Branches today

RBI Monetary Policy on Friday: Economists said that the central bank may increase the reverse repo rate in its bi-monthly monetary policy on February 10

  • Last Updated:February 10, 2022, 07:37 IST
  • FOLLOW US ON:

Reserve Bank of India (RBI) will announce the decision of its bi-monthly monetary policy on February 10. India’s central bank will likely to maintain the status quo on the benchmark interest rate or repo rate amid inflationary concerns. RBI monetary policy committee (MPC) could, however, increase the reverse repo rate to reduce the surplus liquidity in the market. Several experts also expected that the central bank may change the policy stance from ‘accommodative’ to ‘neutral’ in its first MPC after Budget 2022.

RBI MPC has kept the key lending rates at record lows since May 2020. RBI governor Shaktikanta Das has reiterated time and again that the central bank will keep its stance ‘accomodative’ as long as it is needed to support the economy.

RBI MPC: Will the Central Bank Hike Repo Rate?

According to a Reuters poll, the RBI would raise the reverse repo rate to 3.55 per cent to 3.35 per cent. The repo rate will be kept unchanged at 4 per cent.

“While it is widely expected that the RBI will keep the repo rate unchanged at 4.0 per cent in the ongoing MPC meeting we expect that the RBI will raise the reverse repo rate by 25 bps to 4.50 per cent thus narrowing the LAF corridor to 50bps. The move will largely be symbolic in nature given that the RBI has been sucking in excess liquidity through the variable rate reverse repo (VRRR) thus pushing the effective rate closer to the repo rate,” said Jyoti Roy, DVP-equity strategist, Angel One Ltd.

“We expect the MPC to start increasing the policy rates beginning with normalizing the policy corridor between repo and reverse repo rate. We expect the RBI to hike the reverse repo rate in its April 2022 policy meeting,” Brickwork Ratings said in a note.

Read all the Latest News, Breaking News and Coronavirus News here.

,