If you’re feeling the pinch of high interest rates on your home or personal loans, the latest update might not bring much relief.
Despite expectations, experts foresee no reduction in the key policy rate, the repo rate, during the upcoming Reserve Bank of India (RBI) monetary policy review meeting.
No Rate Cut in Sight
The Monetary Policy Committee (MPC) meeting, scheduled for June 5-7, follows closely after the announcement of Lok Sabha election results.
Since February 2023, the repo rate has remained steady at 6.5 percent. Experts speculate that the MPC may maintain this rate due to the growing momentum in economic growth.
Bank of Baroda Chief Economist, Madan Sabnavis, noted that economic conditions have largely remained unchanged since the last MPC meeting.
PMI levels and GST collections indicate positive growth trends, although inflation concerns persist, particularly regarding the rising prices of vegetables.
Similarly, Sanjay Nair, President of industry body ASSOCHAM, anticipates stability in the repo rate during the June 5 MPC meeting.
Reasons for the Stagnation
Experts cite the inflation rate remaining above the 4 percent target as a primary reason for the lack of rate reduction.
Although there has been a slight decline in inflation, the situation is expected to become clearer after the conclusion of the monsoon session in September.
Aditi Nair, Chief Economist at ICRA, points to recent inflation data and food price forecasts as indicators that the status quo is likely to continue, a sentiment echoed by GDP data.
