A report by the US financial services and investment firm Goldman Sachs said that the Reserve Bank of India (RBI) can maintain the policy interest rate at the current level during the monetary policy review next week. According to the report, with the uncertainties surrounding the possibility of oil prices and monsoon, the central bank may maintain the Status Quo at the policy rate, considering the impact of policy decisions and the possibility of inflationary pressures.
RBI announces second bimonthly monetary policy for the current financial year on June 6 "We believe that RBI will maintain current policy rates in the June meeting," the report said. The Reserve Bank has reduced the repo rate by 0.50 percent in total from two in February. This rate is 6 percent this time. The central bank lends money to commercial banks at one rate for one day at this rate.
Regardless of the policy rate reduction, the banks have cut the rate of interest on the average only to 0.05 percent. It has been said in the report that the slowing of the impact of reduction in policy rates is the key basis of our argument that the reverse banks will maintain policy rates at the current level in June. Retail inflation was 2.9 percent in April. It is estimated that in 2019-20 this can go up to 3.9 percent. In the year 2018-19, the average retail inflation was 3.4 percent.
The Indian Meteorological Department has forecast monsoon to be normal this year, but private agency SkyMate has said that El Niño's impact in the summer is above 60 percent. With this, monsoon can remain weak. Crude oil prices may remain high in the current quarter due to uncertainty in reducing oil production in Iran and accelerating the use of their production capacity in other producing countries.
According to the report, in the current financial year, the economic growth may increase further and this could reach 7.4 percent. It is estimated to be 7 percent in 2018-19. It has been said in the report that the Reserve Bank can cut the repo by 0.25 percent in the third quarter of 2019 because the inflation will probably be around 4 percent, the economic growth will be below 7.7 percent and the US central bank Federal Reserve Can maintain a soft stance on monetary policy.
