The Reserve Bank of India (RBI) will announce its first monetary policy for the new fiscal year 2022-23 today. At 10 am, RBI Governor Shaktikanta Das will conduct a press conference to unveil the central bank's monetary policy. On April 6, the Monetary Policy Committee (MPC) led by Das began its bi-monthly assessment. The MPC meeting will conclude on April 8.
The RBI is expected to keep key lending rates unchanged and maintain an accommodative stance in the monetary policy committee meeting. However, the RBI may change its approach in view of retail inflation reaching its upper tolerance limit and global uncertainties.
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The MPC has not changed the repo rate in the last ten meetings. The repo rate was last cut by 40 basis points by the RBI in May 2020. The report rate, often known as the short-term lending rate, is now at 4 percent. In addition, the reverse repo rate was maintained at 3.35 percent. The MPC is expected to revise the inflation target upwards.
According to a Reuters poll, RBI will likely delay its first interest rate hike by at least four months to August at the earliest. The markets are expected to stay unruffled and may also witness a relief rally if rates are left unchanged.
Earlier in February, the central bank decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy. RBI had then projected inflation to average 4.5 percent in 2022-23.
Watch Video: Editor's take: All eyes on inflation forecast in crucial RBI monetary policy; relief rally a possibility
The US Federal Reserve, on the other hand, released the minutes of the Fed's March meeting on Wednesday that show deepening concern among policymakers that inflation had broadened through the economy and the need for tighter monetary policy.
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