Good news for loan holders : The process of increasing the repo rate may stop in the Monetary Policy Committee (MPC) of RBI to be held in April. SBI said in the Ecowrap report, “Important data ranging from retail inflation to Federal Reserve interest rates in India are pointing to the fact that the current repo rate of 6.5 per cent is at a four-year high since 2018.” Hence, there is no possibility of further increase.
MPC is scheduled to begin on April 3, 2023
The three-day meeting of the MPC is scheduled to begin on April 3, 2023. In the MPCate meeting held in February, the repo rate was increased by 0.25 per cent to 6.50 per cent. At that time, RBI had said that the key policy rate has been increased by 0.25 per cent to keep retail inflation under control and maintain high growth rate.
RBI has enough reasons to adopt a soft stance
SBI’s Chief Economic Advisor Soumya Kanti Ghosh said in this report with the help of all the data that RBI now has enough reasons not to increase the repo rate in the April review.
Despite the problems on the liquidity front, the central bank may take a soft stance in the upcoming MPC meeting. However, RBI has the option of increasing the repo rate at the MPC meeting to be held in June.
Inflation may remain close to 5.5%
Ghosh said that on the front of retail inflation, a big relief is expected for the time being. The average inflation rate in the last 10 years has been 5.8 per cent. There is little chance that retail inflation will come down to 5.5 per cent or below in the coming days. For the past two months, retail inflation has been above the RBI’s comfortable range of 6 per cent. Retail inflation was 6.44 per cent in February and 6.52 per cent in January.
