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Kerala Kaumudi Online
Tuesday, 05 March 2024 3.15 AM IST

RBI may not change interest rates

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MUMBAI: Reserve Bank of India's bi-monthly monetary policy review meeting may keep interest rates on hold. Economic experts estimate that there will be no change in interest rates for the fourth time in a row. The assessment is based on a scenario where retail inflation holds steady and the US Federal Reserve decides to keep interest rates high. The six-member Monetary Policy Committee (MPC) headed by the Reserve Bank Governor has decided to meet from October 4 to 6.

Bank of Baroda Chief Economist Madan Sabnavis said the status quo is expected to remain this time with inflation still high and liquidity tight. He also assessed that the current situation will continue in the calendar year. Consumer Price Index (CPI)-based retail inflation eased to 6.83 per cent in August from 7.44 per cent in July, but is remaining above the Reserve Bank's comfort level of 6 per cent.

Inflation is expected to ease to 5.3-5.5 percent in September 2023 from 6.8 percent in August 2023, said Aditi Nair, Chief Economist, ICRA Ltd. Sanjay Bhutani, Director, Medical Technology Association of India (MTAI), said that now is the time for the central bank to consider cutting interest rates with the aim of boosting growth.

The Reserve Bank had raised the repo rate to 6.5 percent on February 8, 2023. Since then the rates have been kept at the same level due to higher retail inflation and some global factors including crude oil price hikes in the international market. The RBI's bi-monthly monetary policy is mainly based on CPI-based inflation.

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