RBI to keep repo rate on hold in June, say experts
The policy tone will likely be balanced yet non-committal, with no change in the stance, thus adding to its inflation-fighting credibility
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Chennai The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) may not remove its finger from the repo rate pause button it had hit in April 2023, said experts there by ruling out the possibility of a rate reduction.
"It is unlikely that the RBI will precede the Fed (US Federal Reserve) in reversing its course of rate hikes. However, MPC may soften its tone, on net amid (1) improving domestic inflation outlook (and a possible downward revision in its forecast), (2) improving external sector dynamics and (3) ongoing monetary-policy lags of past hikes," Madhavi Arora, Lead Economist, Emkay Global Financial Services said.
According to Arora, the upcoming MPC policy is unlikely to differ much from that in April 2023, hinging its reaction function to a fluid global situation and domestic growth-inflation backdrop, and retaining policy flexibility. "The policy tone will likely be balanced yet non-committal, with no change in the stance, thus adding to its inflation-fighting credibility," she added.
"The MPC will not change the repo rate. The inflation is less than five per cent and will be in the coming months," Chief Economist Madan Sabnavis, Bank of Baroda, said. The consumer price index (CPI) inflation moderated in April'23 to 4.70 per cent year-on-year (YoY) and remained within the RBI's target range (2-6 per cent) for the second consecutive month.
