A three-day meeting of the Reserve Bank of India’s Monetary Policy Committee (MPC) began on Wednesday. Due to high levels of retail inflation, the central bank’s monetary review meeting is believed to keep interest rates unchanged.
The results of the meeting will be announced on December 4
The Reserve Bank’s last financial review meeting in October did not change interest rates due to high inflation. Nowadays, inflation has crossed six percent. The Reserve Bank of India estimates that India’s economy will fall by 9.5 per cent in the current financial year due to the Kovid-19 epidemic.
The central bank has slashed the policy rate or repo rate by 1.15 per cent since February this year. Experts are of the view that the Reserve Bank will not cut policy rates due to high consumer price index inflation. “If retail inflation is high, periodic indicators and GDP data show significant improvement in economic activity,” said Amar Ambani, senior vice president and head of corporate research at Yes Securities. As such, we believe there will be no policy rate cut in the December monetary review. In addition, a 0.25 percent cut in interest rates in the February 2021 financial review also faded.
However, Ambani said the Reserve Bank may increase its growth forecasts. Madan Sabnavis, chief economist at Care Ratings, said the monetary policy committee will look at the initial recovery of the domestic economy before any decision is made. It also considers the risks of the economy to be lower. He said he hoped the Reserve Bank would continue its soft stance while maintaining the policy rate at four per cent.
Government intervention through central bank incentives and monetary policy has normalized many sectors of the economy, said Sachin Habra, founder of Peel-Works Private Limited. However, there is much more to be done for the MASME and SME sector. We believe that the Reserve Bank will continue its soft stance, ”he said. A report by Brickwork Ratings said the economy was in constant decline. In such a situation, we believe the MPC will continue its soft monetary stance.
RBI Monetary Policy: Reserve Bank’s Monetary Policy Committee meeting begins today, will the general public get relief on EMI?
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