MPC meet: RBI expected to keep rate unchanged in view of elevated inflation

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PTI citing experts. The six-member monetary policy committee (MPC)-headed by RBI governor Skhatikanta Das is scheduled to meet for three days beginning October 4. The RBI will announce the decision on Friday (October 6).

Since February this year, the central bank has kept the rate unchanged in the last three successive bi-monthly monetary policy reviews. It began raising the policy rate in May 2022 in tranches, in the wake of the Russia-Ukraine war and took it to 6.5% in February. If the RBI leaves key rate unchanged then interest rates for retail and corporate borrowers may also remain stable.

“The credit policy this time will most likely continue with the existing rate structure as well as policy stance. Hence, the repo rate will be retained at 6.5 per cent with the stance of withdrawal of accommodation," Madan Sabnavis, chief economist at Bank of Baroda, is quoted as saying by PTI. “But as the inflation trajectory is downwards a rate hike can be ruled out.

However, we may have to wait for a longer time for the MPC to cut the repo rate." The MPC to maintain status quo on the policy rate as well as the stance, said Karthik Srinivasan, Senior Vice President & Group Head - Financial Sector Ratings at ICRA Limited, as per the PTI report. “The significant tightening in liquidity that was seen in the second half of September is unlikely to sustain, particularly with the release of liquidity from incremental CRR imposed in previous policy." The headline inflation is expected to cool down in September as compared to August, but it still remains above the RBI's comfort zone, said Parijat Agrawal, head-fixed income at Union Asset Management Company, as per the report. “The recent spike in crude oil prices and global bond yields