RBI’s monetary policy today, likely to maintain status quo on key rates
The six-member Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) headed by Governor Shaktikanta Das will announce the monetary policy today. Experts are of the view that the central bank will maintain status quo on the benchmark interest rate in the backdrop of global scare due to the new coronavirus variant Omicron.
If RBI maintains status quo in policy rates, it will be for the ninth time in a row as the rate remains unchanged. The central bank last revised the policy rate on May 22, 2020 to meet demand by cutting the interest rate to a historic low in an off-policy cycle.
On his expectation from the MPC, Dhruv Agarwal, Group CEO, Housing.com, Makaan.com and PropTiger.com, said that the Indian economy is now moving towards the much-awaited normalcy, but it has a long way to go. Go before the government and its agencies to start slowly withdrawing support measures. “With its fundamental premise, we expect the RBI to continue with the repo rate at current levels,” he said.
According to him, the low home loan interest rate regime has been very important to help revive India’s real estate sector, especially during the festive season. “We expect the growth momentum in the sector to continue with no change in the repo rate. However, some increase in the reverse repo rate could be on the cards,” Agarwal said.
Andromeda and ApnaPaisa CEO V Swaminathan said MPC is likely to stall this time as the new coronavirus variant Omicron has created an atmosphere of uncertainty.
He said, “RBI will likely wait for the mitigation of the current COVID-19 variant to better understand the risks. If the development impact of the new version subsides sharply, we expect an increase in reverse repo rates from February onwards. can do.” ,
The Indian economy remained on track to register the fastest growth among major economies this year as its GDP grew at a better-than-expected 8.4 per cent to surpass pre-pandemic levels in the July-September quarter.
GDP growth in the second quarter of the current fiscal year (2021–22) was slower than the previous quarter’s expansion of 20.1 per cent – reflecting a substantial jump from last year’s crash – but better than a contraction of 7.4 per cent Percentage in July-September 2020.
Suman Choudhary, chief analytical officer, Acuite Ratings and Research, said the second half of the fiscal year has relieved concerns over additional government borrowing and the inflation trajectory has eased, but the strength in yields is largely a reflection of one-third of the economy. Sharp rise in global commodity and crude oil prices with the introduction of liquidity normalization by RBI since the last MPC.
“Acuité believes that monetary policy normalization will continue in major global economies given the extended period of high inflation, but based on assessments of residual pandemic risks, the pace may vary among central banks. Even from India Expected to continue gradually. Approach to normalization and a phased increase in reverse repo rate can be envisaged in the current financial year,” Chowdhury said.
The central government has asked the RBI to ensure that retail inflation based on the consumer price index (CPI) remains at 4 per cent with a margin of 2 per cent on both sides. The Reserve Bank had kept key interest rates unchanged after the monetary policy review in August, citing inflation concerns.
Trust Mutual Fund CEO Sandeep Bagla said the upcoming policy meeting is going to be tough with signs of either maintaining the status quo or the beginning of a withdrawal of exceptionally easing monetary policy.
“This could be a non-event – no change in stance and no change in rates. There is a new threat to global growth due to the Omicron variant and the output gap in India is still wide justifying easy monetary policy. appears to be open.” said.
Bagla also did not rule out a hike in the reverse repo rate.
In its October MPC meeting, the central bank pegged CPI inflation for 2021-22 at 5.3 per cent: 5.1 per cent in the second quarter, 4.5 per cent in the third quarter; 5.8 per cent in the last quarter of 2021-22 with broadly balanced risks. CPI inflation for the first quarter of 2022-23 is projected at 5.2 per cent.
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