MPC Poll : RBI to leave key interest rates unchanged at April monetary policy, say economists, bankers

MPC Poll

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MPC Poll : The six-member Monetary Policy Committee of the RBI will meet from April 3 to 5 to decide on interest rates.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is likely to maintain the status quo in the upcoming April monetary policy while remaining cautious on inflation, according to Moneycontrol’s poll of at least 21 economists, bankers and fund managers.

This is because of the moderation in Consumer Price Index (CPI) inflation in February and stable economic activity, said a majority of the economists who participated in the poll. Also, experts pointed out that higher growth in Gross Domestic Product (GDP) gives the central bank room to focus more on lowering inflation.

The majority of experts said that the central bank will maintain its ‘Withdrawal of Accommodation’ stance. However, one economist said it will be changed to neutral.

“The MPC’s language on firm growth—above target inflation dynamics—is unlikely to change materially, suggesting there is limited room to manoeuvre on rates for the time being,” said Radhika Rao, Executive Director and Senior Economist, DBS Group Research.

Adding to this, Murthy Nagarajan, Head-Fixed Income, Tata Asset Management, said the RBI may acknowledge the fall in core inflation and the downside risk to growth from external demand conditions.

The economists and bankers you mentioned expect the Reserve Bank of India (RBI) to maintain current interest rates at their next monetary policy meeting in April 2024. Here’s a breakdown of why they might believe this:

  • Status quo: This refers to keeping things unchanged. In this case, the RBI wouldn’t raise or lower the key interest rate, which is the repo rate.
  • Repo rate: This is the rate at which the RBI lends money to commercial banks. By adjusting the repo rate, the RBI influences borrowing costs throughout the economy.
  • Reasons for not changing rates: There could be several reasons why the RBI might choose to hold the rates steady:
    • Inflation control: If inflation is under control or showing signs of moderation, the RBI might not need to raise rates to curb it.
    • Economic growth: The RBI might want to support economic growth by keeping borrowing costs low.
    • Global uncertainty: If there’s a lot of uncertainty in the global economy, the RBI might prefer to wait before making any changes to interest rates.

It’s important to note that this is just a prediction by economists and bankers. The RBI will make the final decision based on its assessment of the current economic situation and its future outlook.

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