Reserve Bank of India (RBI) may not change the Repo rate from the current 6.5 per cent and continue with the pause policy at the three-day Monetary Policy Committee (MPC) meeting, according to a SBI Research report.
The meeting is scheduled to be held from June 6 to June 8.
SBI Research has released a report titled ‘Prelude to MPC Meeting: June 6-8, 2023’ in which it has made several observations about monetary policy. The report states that RBI may opt for prolonged pause at 6.50 per cent repo rate.
The report also states that the central might bank might downgrade inflation predictions for financial year 2024 and upgrade the growth predictions. The GDP growth rate for Q1 FY24 was pegged in the range of 7.3-8.1 per cent.
On liquidity, SBI Research said, “Liquidity is likely to increase further in coming months owing to deposit of Rs 2000 notes. Based on the current pattern of deposits/exchange of these notes, of the Rs 3.6 lakh crore of Rs 2000 notes, additional deposits in banks could be significant.”
For Federal Reserve rate hikes, the report says that a pause is possible in July while European Central Bank may continue with rate hikes.
In its last policy meet in April, RBI had decided to hit pause after raising repo rate by 250 bps since May 2022 to control high consumer price index (CPI) inflation. For May 2023, CPI inflation has come down to 4.7 per cent from the high of 7.8 per cent in April last year.
