The Monetary Policy Committee (MPC), led by Reserve Bank Governor Shaktikanta Das, is scheduled to convene from June 5 to 7. The RBI will unveil its verdict on June 7,  Friday. Benchmark interest rates in the country have remained unchanged since February of the previous year, standing firm at 6.5 percent. Experts anticipate that the RBI will likely maintain the status quo on/no change in the interest rates this time as well.

What is Monetary Policy?

In simple terms, RBI monetary policy is like a set of rules the Reserve Bank of India follows to control how much money is circulating in the economy and the cost of borrowing that money. It’s like a tool the RBI uses to keep prices stable, encourage economic growth, and ensure the banking system works smoothly. They might adjust interest rates or change how much money banks need to keep in reserve to achieve these goals.

Monetary Policy 2024 –

The Reserve Bank of India (RBI) will conduct its next monetary policy review shortly after the Lok Sabha elections. However, hopes for a rate cut aren’t particularly high. Experts suggest that  the Monetary Policy Committee (MPC) is likely to refrain from reducing the benchmark interest rate.

Since its last hike in February 2023, the central bank has held the repo rate steady at 6.5 percent over the past six bi-monthly policies. If there’s no alteration in the interest rate once more on June 7, then it  will be the eighth consecutive occasion where the RBI maintains the status quo on the benchmark repo rate.

What do the experts say ?

“RBI is expected to remain on pause in the June meeting, as inflation remains above the 4 per cent target. The policy space to remain on pause is provided by strong growth conditions,” said Gaura Sen Gupta, Chief Economist, IDFC FIRST Bank.

“There have been minimal alterations in the economic landscape since the previous MPC gathering. Metrics like PMI and GST collections indicate that growth continues on a positive trajectory. Additionally, there is apprehension regarding inflation, despite recent figures dropping below 5 percent. The surge in temperatures has notably impacted vegetable prices. Concurrently, the Meteorological Department has forecasted a typical monsoon season,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

” In the upcoming MPC meeting, the central bank is expected to keep the repo rate unchanged, given that retail inflation continues to surpass the 4 percent target. “While inflation is decreasing, a clearer picture will emerge during the monsoon session in September,” said Sanjay Nayar, Assocham President .

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