The three-day meeting of the Monetary Policy Committee (MPC), which decides the interest rate of the Reserve Bank of India (RBI), began here on Monday. It is expected that in the first bi-monthly monetary review meeting of the current financial year, the MCP may decide to increase the key policy rate repo by another 0.25 percent.
Analysts believe that with this, the process of increasing interest rates that started from May 2022 will stop.
Various domestic and global factors will be considered during the three-day meeting (April 3-6) of the Monetary Policy Committee headed by RBI Governor Shaktikanta Das. After this, the first bi-monthly monetary policy of the financial year 2023-24 will be announced.
The governor will tell on Thursday what the six-member committee has decided on the interest rates.
To control inflation, the central bank has increased the repo rate by 2.5 percent from May 2022. Despite this, inflation has remained above the Reserve Bank’s comfortable level of 6 per cent for most of the time.
The MPC will specifically look at the rise in retail inflation and the recent actions taken by the central banks of developed countries.
Retail inflation crossed the RBI’s comfortable level in January after remaining below 6 per cent in November and December 2022. In such a situation, the action of the central bank is necessary.
Inflation based on the Consumer Price Index (CPI) stood at 6.52 per cent in January and 6.44 per cent in February.
Experts believe that the central bank will increase the repo rate by 0.25 percent on Thursday, and perhaps with this the process of increasing the interest rate will stop.
The MPC consists of three officers from the RBI and three external members appointed by the central government.