June 3 (Punjab Khabarnama) : Amid inflation challenges, the Reserve Bank of India (RBI) is unlikely to cut the key policy rate repo in the upcoming monetary policy review meeting. Experts have expressed this opinion. It is worth noting that the Monetary Policy Committee (MPC) meeting is scheduled for June 5-7, soon after the announcement of the Lok Sabha election results. Experts said that the MPC may refrain from cutting the rate, as economic growth is gaining momentum. The repo rate has been maintained at 6.5 percent since February 2023.
The decision of the MPC meeting chaired by Reserve Bank Governor Shaktikanta Das will be announced on June 7 (Friday). The results of the Lok Sabha elections will be declared on June 4. If there is no change in the interest rate on June 7, it will be the eighth time to maintain the status quo. Bank of Baroda Chief Economist Madan Sabnavis said that economic conditions have remained largely unchanged since the last policy. He said that high frequency indicators such as PMI and GST collection show that growth is in the right direction. He further said that concerns over inflation remain and the heat has particularly affected vegetable prices.
Industry body Assocham President Sanjay Nayar also expressed hope that the repo rate is expected to be kept unchanged in the upcoming MPC meeting, as retail inflation remains above the target of four per cent. He said, “Although inflation has started to come down, the macroeconomic situation will become clear only after the monsoon session ends in September.” ICRA Chief Economist Aditi Nayar said that the recent inflation data and forecast of food prices suggest that the status quo will remain. He said that the gross domestic product (GDP) data has confirmed this.