MUMBAI, June 2: Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts.
The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023.
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The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7. The decision will be announced on June 7 (Friday). Results of the Lok Sabha elections will be announced on June 4.
The central bank last hiked the repo rate to 6.5 per cent in February 2023 and since then it has held the rate at same level in its previous six bi-monthly policies.
If the interest rate remains untouched again on June 7, it would be the eighth time for the RBI to maintain the status quo on the benchmark repo rate.
On expectations from the June policy, Madan Sabnavis, Chief Economist, Bank of Baroda, said economic conditions have largely remained unchanged since the last policy. High-frequency indicators like PMI and GST collections do show that growth is on course.
He further said concerns on inflation remain even though the last couple of numbers have come at less than 5 per cent. The ongoing heat wave has affected prices of vegetables in particular and while the IMD has predicted a normal monsoon, it would be prudent to wait and monitor how it progresses.
“Under these conditions, a status quo on policy rate and stance may be expected. It would be interesting to see, however, if RBI changes forecasts of GDP and inflation for FY25,” Sabnavis opined.(PTI)
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