RBI to hold first Monetary Policy Committee for FY24 from April 3-6

Mumbai, Mar 31 (KNN) The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) would decide whether it will hike the repo rate or not at its April meeting form April 3 to 6, 2023.

According to CARE Ratings the central bank’s decision in April is likely to be influenced by the unexpectedly high Consumer Price Index (CPI) inflation numbers recorded in the last two months.

“The January and February spike in CPI inflation, combined with core inflation remaining above 6 per cent, may push the policy outcome in favour of one more rate hike. Moreover, the latest inflationary expectations data does not suggest a significant relief,” said the report by the rating agency.

Furthermore, the expectation of the Federal Reserve continuing its rate hike cycle to control inflation may support the RBI’s decision to raise the repo rate in the April meeting before pressing the pause button.

“We expect RBI to hike the repo rate by 25 bps in April to 6.75 per cent. With the real rate turning positive and tight liquidity conditions, we also expect a change of stance from ‘withdrawal of accommodation’ to neutral,” CARE Ratings said.

According to Lakshmi Iyer, CEO-Investment & Strategy Kotak Investment Advisors Limited, the volatility and uncertainty in the global financial markets have increased over the past few weeks, though the European Central Bank and the US Federal Reserve have delivered 50 bps and 25 bps hikes respectively in March.

“In India, CPI remains above the 6 per cent threshold, including core inflation which remains sticky. Though CPI is likely to trend lower in the coming months, the probability of 25 bps rate hike in the upcoming MPC seems high. To hike or not to hike could be the most discussed agenda as the clamour for a pause seems to be only growing,” Iyer added.   (KNN Bureau)