RBI likely to keep repo rate unchanged during next MPC in August: Experts

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RBI Governor Shaktikanata Das-led monetary policy committee (MPC) will meet on 8-10 August and the decision will be announced on 10 August by the Governor. The central bank has kept the repo rate unchanged at 6.5% since February. "We do expect the RBI to hold on to a status quo position on both rates and stance.

The reason is that while inflation is presently running at less than 5 percent there would be some upside risk to this number in the coming months with prices of vegetables and pulses going up sharply. Therefore, an extended pause is expected," said Madan Sabnavis, Chief Economist, Bank of Baroda. Madan Sabnavis opines that the central bank has projected inflation to climb up to 5.4% for the third quarter of this fiscal, so it is unlikely that the repo rate stance may get changed till the next calendar year.

“On the policy stance, since the liquidity conditions have turned favorable post the announcement of the withdrawal of the ₹2,000 note, we expect the RBI to continue to hold on to the current stance of 'withdrawal of accommodation," Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said. Upasna Bhardwaj said that everything will depend on the domestic inflation dynamics and global cues. In June, India experienced a rise in retail inflation, measured by the Consumer Price Index (CPI), reaching its highest level in three months at 4.81%.

This increase was primarily attributed to the upward movement in food prices. It is noteworthy, though, that the inflation rate is still well within the acceptable range set by the Reserve Bank of India (RBI), which aims to keep inflation below 6%. To address the situation and maintain stable inflation, the government has entrusted the central bank with the responsibility