The Reserve Bank of India’s monetary policy committee (MPC) is expected to keep the repo rate — at which it lends to banks — unchanged when it meets early June to take stock of macroeconomic factors and behaviour of prices since April.
Many risks that were flagged then, including oil prices and inflation, have not turned adverse. But, the MPC might prefer to stick to its earlier policy stance. The focus would then be on the outlook of the committee, bankers said.
A senior State Bank of India executive said no rate cut action was expected in the June review, while the outlook might be less hawkish. How rains would spread over the country and the initial feedback over roll-out of the goods and service tax would weigh on the panel members’ minds.
Rating agency ICRA said the repo rate was likely to remain unchanged in the review and the policy tone would be less hawkish. Naresh Takkar, managing director and group chief executive officer of ICRA, accounted this to “the improved outlook for the monsoon, the GST rate structure and easing of commodity prices”, which had abated the inflation risks highlighted by the MPC in April.
via RBI panel to keep repo rate unchanged in June, say bankers | Business Standard News
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