DBS Group Research said in its report released on Monday that the Reserve Bank of India (RBI) may increase its monetary policy by 0.25 percent next month in an effort to reduce inflation.
After the failure of Silicon Valley and Signature Bank, the US Central Bank Fed may or may not increase its interest rates on March 22, but the Monetary Policy Committee of RBI (RBI MPC) The screenplay for the hike in interest rates in April has been written by. RBI’s MPC repo rate in the month of April as per estimates (Repo Rate) May increase by 25 basis points. If this happens then the repo rates will reach the height of 7 years. At present, the policy rate is at 6.50 per cent, which has been increased 6 times in a row. During this, interest rates have been increased by 2.50 percent. It is clear that the increase in the loan EMI of the common people is believed to be certain.
What is the reason after all?
In fact, India’s retail inflation figures have come to the fore, which is more than 6 per cent for the second consecutive month. Even though the figures have been seen a little less than in January, but inflation above the upper level of RBI’s tolerance band remains a major issue for the Reserve Bank. In such a situation, RBI can increase the policy rate in the month of April. The RBI governor has already expressed his concern in this matter. In the February MPC, he had clearly said that core inflation is more than 6 per cent and it continues to be a matter of great concern. Need to work on this.
Retail inflation figures remained like this
Retail inflation eased marginally to 6.44 per cent in February amid softening of food items and fuel prices. CPI based inflation was 6.52 per cent in January and 6.07 per cent in February, 2022. Inflation in food items came down to 5.95 percent in February, which is less than six percent in January. Retail inflation has remained above the upper limit of the Reserve Bank of India’s (RBI) comfort zone of six per cent since January 2022, except in November and December 2022.
DBS expressed an estimate
DBS Group Research said in its report released on Monday that the Reserve Bank of India (RBI) may increase its monetary policy by 0.25 percent next month in an effort to reduce inflation. According to the report, RBI has increased the policy rate by 2.5 percent since May last year to control rising prices. With an increase of 0.25 percent in February, the policy interest rate ie repo has become 6.50 percent. In an online session on economic growth and inflation, Radhika Rao, executive director and senior economist at DBS Group Research, said that the RBI may increase the policy rate by 0.25 percent in April as retail inflation is still high.
Inflation will not be reduced only by monetary policy
Retail inflation was 5.72 percent in December 2022, while it increased to 6.52 in January 2023. However, it softened slightly to 6.44 percent in February. Rao, however, said that inflation caused by supply-side constraints cannot be tackled through monetary policy alone. He said that the weather condition is important for the agriculture sector. The local Meteorological Department has said that the temperature may be high for the next three months… The monsoon coming in June-July is important.
Source: www.tv9hindi.com
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