Given the concerns around economic growth, various rating agencies have also drawn consensus on RBI likely retaining the monetary policy stance at accommodative.
Reserve Bank of India is expected to maintain the status quo on the interest rates for the second time in a row in the upcoming Monetary Policy Committee meeting. RBI’s MPC meeting was scheduled to commence on Tuesday but it has been postponed till further notice. With the current level of inflation and prevailing uncertainty over the growth outlook, it is expected that the RBI will adopt a wait-and-watch approach and hold the repo rate at 4 per cent, said Brickwork Ratings. Care Ratings has also projected the same outcome from the upcoming MPC meeting. Of the 29 economists and treasurers polled by Cogencis, almost all the members see the committee not changing the repo rate from 4 per cent.
Given the concerns around economic growth, various rating agencies have also drawn consensus on RBI likely retaining the monetary policy stance at accommodative. On the other hand, the central bank is also expected to continue with its relief measures amid the sinking economy. “We expect RBI to continue with its conventional and unconventional liquidity measures to improve financial conditions and for yield curve management,” Care Ratings said in a report.
The report added that concerns around a contraction in economic growth, inflation pressures, muted credit growth, global economic concerns, and a plausible increase in non-performing assets, are still underlying. RBI Governor Shaktikanta Das had earlier said that despite a headroom for further monetary policy action, some more time should be given to the cumulative 250 basis points cut in the policy rate to seep into the financial system and further reduce the interest rates.
Meanwhile, the economists at SBI had underlined that RBI is at the end of its rate cut cycle amid high inflation and the onus of economic recovery has now shifted to the government. The economists added that the fiscal policy should play a decisive role if the economy has to see a fast-paced recovery.