RBI's MPC meet starts amid expectations of yet another rate hike

Press Trust of India

Mumbai: The RBI's rate-setting panel on Monday started its three-day meeting amid expectations that the central bank may go for 25 basis points hike in benchmark interest rate, probably the last in the current monetary tightening cycle that began in May 2022.

Reserve Bank Governor Shaktikanta Das-headed Monetary Policy Committee during its three-day meeting (April 3, 5 and 6) will take into account various domestic and global factors before coming out with the first bi-monthly monetary policy for fiscal 2023-24.

The decision of the sixmember rate setting panel will be announced by the Governor on Thursday. The central bank has already increased repo rate by a total of 250 basis points since May in a bid to contain inflation, though it has continued to remain above the RBI's comfort zone of 6 per cent most of the time.

The two key factors which the committee is expected to deliberate intensely while firming up the next monetary policy are elevated retail inflation and the recent action taken by central banks of developed nations especially the US Federal Reserve, the European Central Bank and Bank of England.

Having remained below six per cent for two months (November and December 2022), the retail inflation breached the RBI's comfort zone in January, warranting action by the central bank. The Consumer Price Index (CPI)-based inflation was 6.52 per cent in January and 6.44 per cent in February