RBI's policy review: Status-quo on interest rate likely, say experts

Earlier this month, the govt reconstituted the Reserve Bank's MPC

- OUR CORRESPONDENT

MUMBAI: The Reserve Bank is unlikely to cut the bench-mark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts.

Earlier this month, the government reconstituted the Reserve Bank's rate-setting panel - Monetary Policy Committee. The reconstituted panel, with three newly appointed external members, will commence its maiden meeting on Monday. MPC Chairman RBI Governor Shaktikanta Das will reveal the outcome of the three-day discussion on Wednesday (October 9).

The RBI has kept the repo or short-term lending rate unchanged at 6.5 per cent since February 2023, and experts think some easing could only be possible in December.

The government has tasked the central bank to ensure that Consumer Price Index based retail inflation remains at 4 per cent with a margin of 2 per cent on either side.

In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points (bps), and the central banks of some developed nations, which have reduced the interest rates.