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The Reserve Bank of India’s (RBI) rate-setting panel began its three-day meeting on April 3, amid expectations that the central bank may go for a 25 basis points hike in the benchmark interest rate, which is expected to ease the current monetary tightening cycle. I’m probably the last one. In May 2022.
The Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, during its three-day meeting (April 3, 5 and 6) will take into account various domestic and global factors before coming out with the first bi-monthly monetary policy for the fiscal . 2023-24.
The decision of the six-member rate fixing panel will be announced by the governor on Thursday. Central bank has already increased the repo rate Total 250 basis points since May In an effort to control inflation, however, it has remained above the RBI’s comfort zone of 6% most of the time.
The two key factors that the committee expects to discuss in depth while tightening the next monetary policy are the increase in retail inflation and the central banks of developed countries, especially by the US Federal Reserve, the European Central Bank and the Bank of England. Recent action taken.
After remaining below six per cent for two months (November and December 2022), retail inflation crossed the RBI’s comfort zone in January, requiring action by the central bank. Consumer Price Index (CPI) based inflation stood at 6.52% in January and 6.44% in February.
Experts expect the central bank to raise the key policy rate (repo) by up to 25 basis points on Thursday, and this will likely be the last in the current monetary policy tightening cycle that began in May. The RBI has increased the repo rate six times so far, including an off-cycle surprise increase of 40 basis points in May 2022.
The RBI is tasked with ensuring that retail inflation remains at 4% with a margin of +/- 2%. However, it failed to keep the inflation rate below six per cent for three consecutive quarters from January 2022. The MPC consists of three RBI officers and three external members appointed by the central government.
The external members are Shashank Bhide (Honorary Senior Advisor, National Council of Applied Economic Research, Delhi); Ashima Goel (Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai); and Jayant R. Verma (Professor, Indian Institute of Management, Ahmedabad).