The Reserve Bank of India (RBI)’s Monetary Policy Committee has begun its three-day deliberations in Mumbai- the first meeting since the announcement of the Interim Budget by Finance minister Nirmala Sitharaman. According to SBI Research, the RBI could again put a pause on the repo rate. In its December meeting, the RBI decided to keep the policy repo rate unchanged at 6.5 per cent, maintaining status quo for the fifth straight time.
“We expect the RBI to continue pause stance in upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts,” research report Ecowrap said.
The first repo rate rate cut could be on the table from June 2024. “Aug’24 looks the best bet now…,” it said.
The RBI conducts six bimonthly meetings in a financial year to deliberate interest rates, money supply and inflation outlook.
RBI MPC 2024: What is the repo rate?
The repo rate is the rate of interest at which RBI lends to other banks.
RBI MPC 2024: When does RBI increase the repo rate?
Generally, when inflation increases, the RBI increases the repo rate to deter lenders from borrowing. The higher the repo rate, the higher the cost of borrowing for the lender from RBI.
RBI MPC 2024: When does RBI lower the repo rate?
When the RBI lowers the repo rate, the lenders’ cost of borrowing comes down because of which borrowers benefit as lenders pass the rate cut benefit on to them.
RBI MPC 2024: When does RBI maintain the repo rate?
A relative decline in inflation may prompt the central bank to put the brake on the key interest rate.
RBI MPC 2024: When did RBI change repo rate?
The RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022. Raising interest rates typically helps in suppressing demand in the economy, thereby helping the inflation rate decline.
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