Today is the last day of the three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI). RBI Governor Sanjay Malhotra will announce the decision on repo rate today, June 5 at 10:00 am – the entire country is waiting for this announcement. The decision comes at a critical juncture: inflationary pressures are rising, and India’s economic growth is at risk due to supply chain disruptions and rising energy prices due to the ongoing Iran-US conflict.
Most experts believe that RBI will keep the repo rate at 5.25%; There is very little possibility of change in this. However, given the rising tensions between the US and Iran and the resulting surge in crude oil prices, some are expecting a rise in rates by 0.25%. You can watch the live streaming of this announcement on RBI’s official YouTube channel or X (earlier Twitter) account.
*RBI is less likely to take any hasty decision; Expect to be careful*
According to a report, Research Analyst Gaurav Garg of Lemon Markets Desk also believes that RBI’s MPC will not make any change in the repo rate in the upcoming meeting. He said recent events – such as rising crude oil prices, volatile fuel prices, weak rupee and geopolitical uncertainties – have heightened inflation concerns. However, since the current inflationary pressures are mainly supply-related, there is little scope for an immediate policy change. Garg hopes that RBI will exercise caution instead of tightening the policy hastily. He said the market has already accepted a “no change” scenario in rates, which will help maintain stability in both the equity and fixed-income segments.
*What dilemma is RBI facing during the meeting?* Rahul Bajoria, Chief India Economist of BofA Global Research, said that the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is in a dilemma whether to focus on “market pressures or incoming data” in the June meeting. “Adopting a ‘hawkish’ stance without changing interest rates may be the best middle path. This will allow the RBI to avoid sounding the alarm on exchange rate stability while also conveying its intention to remain cautious,” he said. According to a Reuters survey of 56 economists, about 80 percent believe the central bank will keep the repo rate at 5.25% at the end of its three-day meeting on Friday.
