Monsoon holds key for RBI's future monetary policy actions
heatwaves this summer, chances of the Reserve Bank of India (RBI) cutting key interest rates have also diminished.
Severe heat conditions in the country are likely to have an impact on food prices, according to a report by the Bank of Baroda, and it asserted that monsoon now holds the key.
IMD has though predicted above-normal monsoon for this year.
Southwest monsoon normally sets in over Kerala on June 1 with a standard deviation of about seven days. These rains are crucial, especially for kharif crops dependent on rains. India has three cropping seasons — summer, kharif and rabi.
Pressure in food prices has been interrupting the ongoing disinflation process in India, and posing challenges for the final descent of the inflation trajectory to the 4 per cent target.
«RBI will closely monitor timing and distribution of rainfall before cutting rates,» the Bank of Baroda report read.
The RBI typically conducts six bimonthly meetings in a financial year, where it deliberates interest rates, money supply, inflation outlook, and various macroeconomic indicators. The other five meetings are scheduled for June 5-7, 2024; August 6-8, 2024; October 7-9, 2024; December 4-6, 2024; and February 5-7, 2025.
The RBI is currently focused on bringing down the inflation to 4 per cent target on a durable basis. Along anticipated lines, RBI kept the policy repo rate unchanged at 6.50 per cent, the seventh time in a row. The repo rate is the rate of interest at which the RBI lends to other banks.
Further, the lender's report
