The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is all set to announce its monetary policy decision today. This will be the third time in 2023 that the MPC will announce its monetary policy decision.
Between May 2022 and February this year, the repo rate has been hiked by 250 bps to 6.5 per cent. In April, the MPC decided to hit the pause button on rate hikes. RBI Governor Shaktikanta Das emphasised that it was a pause and not a pivot while retaining the possibility of further tightening.
The consumer price index-based (CPI) inflation – the main yardstick for monetary policymaking – in April declined to an 18-month low of 4.7 per cent year-on-year (YoY) (from 5.7 per cent YoY in March), well within the RBI's 2-6 per cent target band.
It had maintained its stance of "withdrawal of accommodation" in the April meeting.
"The RBI is expected to continue the pause, with no change in the repo rate in the forthcoming policy review meeting on June 8. The growth rate of the Indian economy is encouraging, well above the global rates, and inflation is also indicating a moderating trend," Jyoti Prakash Gadia, managing director at Resurgent India told Business Standard.
"The full impact of the 250 basis points increase in repo rate undertaken by RBI since May 2022 is still panning out in relation to the growth versus inflation matrix, and any change in the policy rate may require some further examination of the emerging economic parameters, before taking a final view on either increasing or decreasing the repo rate," he added.
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V Swaminathan, executive chairman at Andromeda Loans and Apnapaisa expressed the same views, "Given the current circumstances, our expectation from the RBI is to refrain from raising policy rates, as it may negatively affect loan demand. We believe that if not a cut, maintaining stable interest rates would be advantageous in supporting ongoing economic growth and fostering a conducive lending environment."
In an earlier Business Standard poll, 10 participants also said that the RBI is expected to keep the repo rate unchanged.
On the stance, however, Vivek Iyer, partner at Grant Thornton Bharat, said that the RBI may change the stance to neutral.
"We expect the RBI to keep a neutral stance but with a wait-and-watch approach. The inflation has cooled down and the RBI would not want to subdue the aggregate demand in the economy further with anyways external factors indicating a global slowdown. In no way do we expect this neutral stance to indicate a dovish approach from rbi but would rather brand this as a 'cautious approach'," he said.
In the BS poll, most of the respondents said that the RBI should continue to maintain the "withdrawal of accommodation" stance.
Where to watch the RBI MPC announcement?
The monetary policy decision will be announced by RBI Governor Das on the official YouTube channel of the RBI. The speech will also be available on the RBI's website after it is announced. Later, the RBI will also conduct a press conference with other members of the MPC.
At what time will RBI MPC announce its policy?
The telecast of the RBI MPC will start at 10 am on Thursday, June 8.