New Delhi, 2 June (IANS). The RBI Monetary Policy Committee (MPC) meeting is scheduled to be held later this week. Analysts hoped on Monday that the central bank would cut 25 basis points for the third consecutive time, as inflation remains below the average target of 4 percent.
Since the 50 -basis point reduction by April this year, the repo rate from the central bank in FY 2026 is expected to cut the next 50 basis points (BPS).
According to the latest note of Crisil, bank loan rates have started declining, which should promote domestic demand.
The report said, “Improvement in domestic consumption is likely to promote industrial activity. We hope that the domestic consumption will improve due to healthy agricultural development, promotion of discretionary expenditure from low inflation and relief in income tax in this financial year.”
According to Madan Sabnavis, chief economist at Bank of Baroda, “There is a relatively stable conditions of inflation and the situation of liquidity through various measures of RBI remains comfortable. With this we believe that MPC will cut the repo rate on June 6.”
Comments on both development and inflation will be important, as their forecasts are expected to be amended for both parameters.
Sabnavis said, “It is also expected that the RBI will describe its analysis in detail as the tariff relief provided by the USA ends in July, how the global environment will affect the Indian economy.”
The Reserve Bank has said that it will continue the liquidity management operation by keeping pace with monetary policy trend to maintain system liquidity to meet the productive needs of the economy.
The central bank said in its ‘2024-25 annual report’ that monetary policy needs to be a development-supporter with a benign inflation approach and moderate development, while rapidly developing global comprehensive economic conditions should be cautious.
In its April meeting this year, the RBI MPC unanimously voted for reduced the policy repo rate from 25 basis points to 6.0 percent. Apart from this, MPC also decided to take an acceptive stance from neutral.
-IANS
SKT/ABM
