RBI Policy Preview: Monetary policy meeting begins today; economists expect the status quo on the repo rates
Economists pointed out that apart from addressing the inflation issue, another purpose of raising the repo rate and tightening the monetary policy was to ensure better liquidity in the system.
The bi-monthly monetary policy meeting of the monetary policy committee (MPC) started in Mumbai today. This is the second bi-monthly meeting of FY24, which is being held from June 6 to 8, the outcome of which will be announced on June 8. However, economists expect the MPC to remain on hold and keep the rates unchanged. Economists also suggest that there won't be any rate hikes. Rather, the economists anticipate that the earliest possible rate cut can be announced during the third quarter, most probably in October 2023.
"Headline CPI inflation is expected to remain firmly within the RBI’s tolerance band, averaging 5.0 per cent in FY24. Indeed, in Q1FY24, inflation is expected to average around 4.5 per cent, aided by a supportive base effect. The monsoon's performance remains the key risk to inflation. Against this favourable macro backdrop, the RBI is expected to maintain the status quo on policy rates in June," said Gaura Sen Gupta, economist at IDFC First Bank.
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