Mumbai: After an unusual 3-day long deliberation, the Reserve Bank of India’s (RBI) monetary policy committee (MPC) is set to announce its decision on key policy rates today.
While the majority of economists surveyed by Mint expects the MPC to hold the repo rate at 6%, with the central bank signalling the withdrawal of an accommodative policy, a minority is not ruling out the probability of a rate hike in today’s policy. RBI will announce policy decision after 2.30pm. Here are five things that might be on the radar of the monetary policy committee:
Policy action: Even as the market expects status quo, there are three likely scenarios that can emerge from today’s policy. First RBI could maintain a pause in policy rate with change in stance from neutral to hawkish, signalling that more rate hikes are imminent. The second scenario is when the RBI could hike the policy rates, and lastly a rate hike followed by a hawkish stance.
Inflation: Since the last policy retail inflation has accelerated to 4.6% in April, after dropping to 4.28% in March and 4.4% in February. Core inflation also quickened for six successive months to 5.9%, a four-year high. RBI’s own forecast shows CPI inflation to quicken to 4.7-5.1% in the first half of this current fiscal year and thereafter slow down to 4.4% in the second half.
