The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) will begin its bi-monthly meeting on Tuesday, June 6. RBI Governor Shaktikanta Das will announce the outcome of the meeting on Thursday, June 8. According to a CNBC-TV18 poll of economists, the Reserve Bank of India is likely to opt for a pause in terms of interest rate hikes.
The Monetary Policy Committee is likely to retain its stance at 'withdrawal of accommodation', most of the economists polled by CNBC-TV18 said, even as there lay a possibility for a change to 'neutral'.
The MPC has hiked interest rates by 250 basis points since May 2022. Following Russia's invasion of Ukraine last year, the MPC held a meeting in May and hiked the interest rates by 40 basis points to 4.4 percent and only left it unchanged in April 2023.
During the MPC decision in April, Das had called it a "pause and not a pivot". He also noted that it was not prudent to give specific forward guidance on rates, as the bank's decisions would be based on a range of factors, including inflation, growth, and financial stability.
Last month, Das had reiterated the same at the Confederation of Indian Industry Annual Session 2023. He had said a definitive change in monetary policy stance cannot be committed to. "It's not a decision which is entirely in my hands because I am driven by what is happening at the ground level," he had said.
On the growth front, however, the Governor was upbeat. At the CII event last month, he had said he was expecting India's economy to grow a little over 7 percent in FY23, And India's economy did grow at 7.2 percent in the entire FY23.
For FY24, he had said that after a lot of internal analysis, the RBI had reached on the 6.5 percent growth estimate.
Most of the economists polled, asserted that while India’s growth is much stronger than anticipated, they had concerns about the uncertainty around El Niño and sticky core inflation across the globe.
The MPC is also meeting on the backdrop of consumer price-based (CPI) inflation declining to an 18-month low of 4.7 percent in April from 5.66 percent in the previous month, staying well below the central bank's upper tolerance zone for the second consecutive month, as food prices eased. The RBI targets an inflation range of 2 percent-6 percent.
Last month, Das said that inflation has moderated but there is no room for complacency. He said the war on inflation is not over. "We have to remain alert, no cause for complacency," he said.
The economists polled expected a possible rate cut later this fiscal, but it still depended on the data that would come.
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