RBI Monetary Policy Today: From repo rate to MPC stance, here's what D-Street expects amid global headwinds
keep its key repo rate unchanged at 6.50 per cent at the conclusion of the MPC meeting, with only a few expecting a 25 basis point hike. Analysts also do not expect the central bank to change its stance from ‘withdrawal of accommodation’.
However, the recent uptick in international crude oil prices are likely to keep the MPC's focus on India's inflation projections in the forthcoming quarters. Also Read: RBI Monetary Policy: Will high crude oil prices impact MPC's decision? The current policy narrative for the central bank's rate-setting panel would continue to be inflation and liquidity management.
On inflation, near-term bias is towards sharp correction and structural stickiness in non-perishable food, and fear of rising input prices due to crude and a possible INR depreciation could pose risk to core inflation down the line, according to Emkay Global Financial Services. India's consumer price index (CPI) based inflation rose to 7.8 per cent in July due to a surge in prices of food items, and later eased to 6.8 per cent in August.
The RBI then upwardly revised the country's retail inflation projections for 2023-24 at 5.4 per cent, against the 5.1 per cent it projected in its previous monetary policy meeting in June. On liquidity, the RBI has, in recent weeks, been draining liquidity using short-term forex swaps/secondary market OMO (open market operations) sales to tighten monetary conditions and push overnight rates above the repo rate.
‘’We expect this to press on, but it remains to be seen whether RBI will continue with ad hoc measures or announce a more enduring liquidity draining policy,'' said the brokerage in its research report. "Exciting news! Mint is now on WhatsApp Channels
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