RBI-MPC May Not Change The Interest Rate: Experts

    Inam Ansari
    June2/ 2023

    Chennai: The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) may not change the interest rates and would continue with the 'pause' mode at their upcoming meeting, said experts. The MPC met on April 3, 5 and 6 this year and decided to pause on the repo rate at 6.50 per cent after hiking continuously earlier as an inflation control measure. "The upcoming MPC meeting in early June is expected to focus on two important aspects that have emerged in the last few weeks -- a sustained moderation of the headline retail inflation and a better than expected GDP growth print in Q4FY23," Suman Chowdhury, Chief Economist and Head - Research, Acuite Ratings and Research told IANS. According to Chowdhury, the consumer price index (CPI) inflation moderated in April-23 to 4.70 per cent year-on-year (YoY), an 18-month low and remained within the RBI's target range (2-6 per cent) for the second consecutive month. "The wholesale price index (WPI) inflation moderated to a 34-month low of minus/(-)0.92 per cent YoY in Apr-23, retreating to negative territory after a gap of 33-months," Chowdhury added. Core retail and wholesale inflation also moderated to an 11-month low of 5.48 per cent YoY and 41-month low of minus/(-)1.77 per cent YoY in Apr-23 respectively. Chowdhury said the benign trajectory for both WPI and CPI can be attributed to easing food inflation, lower commodity costs, favourable statistical base effects and lagged impact of past monetary tightening. "Potential risks such as the El Nino notwithstanding, we expect a continuing moderation in headline CPI inflation in FY24 although core inflation can prove somewhat sticky amidst the strong growth momentum in services, especially contact intensive ones. We maintain our FY24 CPI ...

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