RBI Credit Policy: The meeting of the Monetary Policy Committee of the Reserve Bank is starting from today. This meeting will continue till August 6. Due to the Korana epidemic, many experts are assuming that the Reserve Bank will not make any changes in the interest rates this time too. But more than this, the focus will be on what the RBI’s stand remains, what will be its projections regarding retail inflation and growth.
Will RBI change interest rates?
The last meeting was held in June, in which the Reserve Bank did not make any changes in the repo rate and reverse rate. All 6 members of the Monetary Policy Committee (MPC) gave their decision in favor of no change in interest rates, this was the sixth time that the Reserve Bank left interest rates as they are. The Reserve Bank of India will not tinker with the interest rates this time also in the credit policy review. This estimate rating has been expressed by ICRA’s Chief Economist Aditi Nair and Senior Economist Vrinda Jagirdar. Apart from this, Deloitte India economist Rumki Majumdar said that the Reserve Bank will adopt the policy of wait and watch as there is limited scope for change in monetary policy.
Less room for change in interest rates
Apart from this, Pwc India’s Leader-Economic Advisor-Services Ranan Banerjee says that the US Fed Reserve and other main central banks have maintained the status quo. Our Monetary Policy Committee will also follow this path. Shriram Transport Finance Managing Director and CEO Umesh Revankar also said that the RBI will maintain the repo rate at the current level despite the high inflation rate. Revankar said that the main reason for retail inflation is the rise in fuel prices, which will subside in some time and the inflationary pressure will ease.
Retail inflation is above the prescribed limit
Let us tell you that retail inflation is a major factor in the monetary policy of the Reserve Bank. The Reserve Bank has fixed it at 4 percent with (+/-2) percent margin.
Between June-November 2020, the inflation rate was above its fixed limit. Then in May and June 2021 also the inflation rate has gone above its fixed limit. In June, the Consumer Price Index (CPI)-based inflation rate stood at 6.26%, compared to 6.3% in the previous month.
In the report of BofA Global Research, it has been said that the Monetary Policy Committee of RBI will maintain the status quo on interest rates in its review on 6 August. However, the MPC may increase the CPI inflation forecast by 5.1%.
