In this era of rising inflation, the common man may get another setback. There is a possibility that now the loan rates may become more expensive. RBI’s Monetary Policy Committee meeting is scheduled during June 6-8. Monetary policy decisions are to be announced on June 8. There is speculation that the central bank may increase by at least 25 basis points (bps) from the 40 bps hike last month following the off-cycle Monetary Policy Committee (MPC) meeting. Experts are expecting a further hike in the repo rate in the coming months.
The Reserve Bank of India (RBI) is likely to raise the benchmark lending rate sharply in its upcoming monetary policy review on Wednesday as inflation shows no signs of moderating. The rate hike was already indicated by RBI Governor Shaktikanta Das. The MPC (Monetary Policy Committee) headed by Das will meet for three days from Monday, June 6 to June 8, 2022.
The decision taken during the meeting will be announced on Wednesday. Last month, in its off-cycle monetary policy review, the central bank hiked the policy repo rate by 40 basis points, or 0.40 per cent. This was the first hike in the policy repo rate in nearly two years. Repo rate is the interest rate at which RBI lends short-term money to banks.
In the first Monetary Policy Committee meeting of the current financial year held during 6-8 April, RBI did not make any changes in key rates. It decided to increase the policy repo rate by 40 basis points to 4.40 per cent. This was the first hike in the policy repo rate after May 2020. By the end of the current financial year, the RBI is likely to increase the policy repo rate to 5.65 per cent from the current 4.4 per cent.
This is the estimate of market analysts
According to economists and financial market analysts, with inflationary pressure in the economy, the Reserve Bank of India may hike the policy repo rate by 40 basis points on Wednesday and raise it to 0.35 per cent in August. According to foreign brokerage firm Bank of America Securities, the RBI may increase the policy rate by 0.40 per cent next week and 0.35 per cent in August.
Bank of America Securities said in a report, RBI may further increase the repo rate by 0.40 percent next week. Apart from this, it can also increase by 0.35 percent in the August review. If this does not happen, then the RBI may make up its mind to increase by 0.50 per cent next week and 0.25 per cent in August.
On expectations from the MPC, Bank of Baroda Chief Economist Madan Sabnavis said the loan policy to be announced will be important from the perspective of not only rate action but also RBI’s views on growth and inflation.
Dhruv Aggarwal, Group CEO, Housing.com, PropTiger.com and Makaan.com, said the RBI is expected to hike the repo rate once again to control inflation, which is largely driven globally. Rakesh Kaul, CEO, Clix Capital, said that the June MPC meeting is definitely expected to hike rates.
Posted By: Navodit Saktawat