Mumbai: Amid the increase in the price of global commodities and the need to contain inflation at home, bank reserves are likely to maintain the status of quo to interest rates for the eight consecutive times in the revive review of bi-monthly monetary policy this week, according to experts .
The reserve bank has cut the last repo level with 40 basis points in May 2020 to 4% to spurred demand for the Covid economy.
Since then, RBI has refrained from taking action in interest rates.
The Governor of RBI, which is headed by the Member’s strange monetary policy committee (MPC) is scheduled to meet for three days since October 6.
The decision taken at the meeting will be announced by the Governor of Shaktikanta Das on October 8.
A research report Morgan Stanley expects RBI to continue to maintain the tariff and maintain its accommodating attitude in the revivement of the upcoming policy.
“We opened the CPI headline to stay bound by a range of about 5% in the current fiscal year, even when the core inflation remains sticky and pressure comes from higher global commodity prices.
We will still use the RBI tone and guide regarding the possibility of normalization of policies.
We see The risk of rising interest rates (base case in 1Q22) as leaning to delay because of growth fears may dominate that inflation is likely to track below the RBI estimate, “he said.
Chairman of SBI Dinesh Khara recently said that it looks like interest rates must remain like that.
“Growth only shows green shooting.
So, I think maybe, the level might not really rise, but comments can talk about inflation.
For inflation my mind is basically due to supply chain disorders and after this disorder is handled, inflation can be handled, maybe it happens Not really raised his head, just as seen during the final policy decision, “he said.
At his hopes of MPC Meet, Ramesh Nair, Chief Executive Officer (CEO), India and the Implementing Director, Market Development, Asia Colliers, also anticipated that the repo level would remain unchanged in a meeting of the monetary committee that would change.
“It will be a long way to revive the momentum in the housing market.
Stable housing prices, stamp duty in several countries, and the tendency to have a house has revived housing requests from the fourth quarter 2020 …
Repo is stable …
the value will ensure The bank keeps their home loan rates low.
This will definitely cause uptick in sentiment, after Q2 2021 dull because of the second wave of Covid, “Nair said.
Rumki Majumdar, economist, Deloitte India believes that there is pressure on the RBI to change the attitude of monetary policy.
“Many of them have increased speculation about the attitude of monetary policy in industrialized countries because recovery in industrialized countries leads to higher inflation and rising commodity prices,” said Majumdar.
According to Indian Deloitte economists, the reserve bank can decide to continue with the status quo and do not change the stance of monetary policy or increase interest rates.
Majumdar also said that with the level of fell covid infection and rapid inoculation, the prospect of India’s growth and very promising prospects.
The September issue of the September edition, which was written by D K Srivastava, the main policy advisor, Ey India, said that the CPI inflation remained under pressure, the RBI might not carry out further repo level reductions in the near future.
Monetary policy will only play a supporting role while the main push for growth may need to come from the fiscal side, he added.
If the RBI maintains the status quo at the policy level on Friday, it will be eight consecutive times because the level remains unchanged.
The central bank has last revised the policy rate on May 22, 2020, in an off-policy cycle to play with requests by reducing the interest rate to historic low.
The RBI has been requested by the central government to ensure that retail inflation is based on a permanent consumer price index at 4% with a margin of 2% on both sides.
Reserve Bank has maintained major interest rates unchanged in monetary policy reviews in August quoting inflation fears.
The RBI has projected CPI inflation of 5.7% over 2021-22 – 5.9% in the second quarter, 5.3% in the third, and 5.8% in the fourth fiscal quarter, with a broad balanced risk.
CPI inflation for Q1 2022-23 is projected at 5.1%.
CPI inflation is at 5.3% in August.
Inflation data for September is scheduled to be released on October 12.