RBI may continue to hold rate amid concern over inflation: Experts
RBI Governor-headed six-member Monetary Policy Committee's (MPC) meeting is scheduled on August 8-10. The policy decision will be announced on August 10 by Governor Shaktikanta Das. The borrowing cost, which started rising in May last year, has stabilised with the RBI keeping the repo rate unchanged at 6.5 per cent since February when it was raised from 6.25 per cent.
Later, in the two bi-monthly policy reviews in April and June, the benchmark rate was retained. Punjab & Sind Bank Managing Director Swarup Kumar Saha said the RBI factors in many things, including global developments. So, it will also take into account interest rate hikes effected by many central banks like the US Fed recently.
Due to interest rate increases, yields in the domestic markets have gone. «Looking at the overall situation, my guess is that the RBI would retain the repo rate at the present level. The interest rate is likely to be stable for the next 2-3 quarters if the global situation remains stable,» Saha said.
LIC Housing Finance Managing Director Tribhuwan Adhikari too said the central bank is unlikely to tinker with interest rates and maintain the status quo in the upcoming monetary policy review. The interest rate is likely to remain stable in the near term, Adhikari said. The government has tasked the central bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side.
The central bank factors in the CPI to arrive at its bi-monthly monetary policy decision. Indranil Pan, Chief Economist at Yes Bank, said that taking consideration of the domestic flare-up in vegetable prices led by tomato, there is likely to be no consideration from the MPC to make any alterations — both to the rate and stance. The
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