RBI Likely To Maintain Status Quo On Policy Rate Despite Rising Inflation: Experts

Mumbai, Aug 4 (KNN) The Reserve Bank of India (RBI) may keep the policy rate unchanged in the monetary policy review next week in spite of mounting inflation. 

The six-member Monetary Policy Committee headed by RBI Governor Shaktikanta Das will meet from August 8 to 10. The monetary policy review will be announced on 10 August.

Professor NR Bhanumurthy, Vice-Chancellor, Ambedkar School of Economics University, Bengaluru, told news agency PTI that although consumer price index-based inflation is rising, mainly due to food inflation, credit demand remains stable.

I don't think RBI will ignore it. It will probably maintain the status quo on the interest rate. He said retail inflation may be around 5.5% due to seasonality and if we remove it, it will be around 4 to 4.5%.

It is noteworthy that retail inflation increased to 4.81% in June from 4.31% in May. Siddharth Sanyal, Chief Economist, Bandhan Bank, said that curiosity about the next MPC meeting has definitely increased. He said the MPC maintained the status quo in the policy rate in the April-June quarter after hiking the interest rate in the previous fiscal.

The move paid off with consumer price index-based inflation falling below five percent in the summer months. The RBI had raised the key policy rate repo by an overall 2.5% through May 2022 to control inflation, before leaving the rate unchanged in April.

The US Federal Reserve recently raised the interest rate by 0.25% points to 5.25-5.5%, taking it to the highest level in several years. The European Central Bank has also increased the interest rate by 0.25%. Due to this, its main rate has become 3.75%.  (KNN Bureau)