RBI MPC Meet Starts Today, Repo Rate Hike on the Cards

Today, three days Monetary Policy Committee meeting is scheduled with the governor of the Reserve Bank of India (RBI), Shaktikanta Das, and another member of MPC. On August 5, the decision on MPC has monetary policy for FY23 will be made public.

In May, with an unexpected 40-basis-point increase in the repo rate and another one of 50 basis points in June, RBI started a hike in the repo rate. Currently, the repo rate policy is 4.90 per cent. As a result, the Bank Rate has been modified to 5.15 per cent, the marginal standing facility rate to 4.65 per cent, and the standing deposit facility rate to 4.65 per cent.

As per the forecast of RBI policy, the inflation would remain over six per cent through Q3FY23 and would only briefly fall less than six per cent in the fourth quarter. The RBI has given a prediction of 6.7 per cent in 22-23, with Q1, Q2, Q3, and Q4 at 7.5 per cent, 7.4 per cent, 6.2 per cent, and 5.8 per cent, respectively. In 2022, the projection was assumed that the average price of crude oil would be $105 per barrel.

“We expect RBI MPC to hike the benchmark repo rate by 50bps as CPI continues to rule above RBIs threshold band. Commentary may be neutral/dovish as CPI trend seems to be following RBIs forecast for FY 2023. Key to watch also would be the guidance if any in the future course of rate moves,” she said.

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