The meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India, which is held once in every two months, has started today. Its final result will come on June 4. It is believed that the committee of the Reserve Bank will not make any changes in other rates including the repo rate this time too. That is, the situation is going to remain the same.
The MPC panel in its last meeting held in April 2021 also did not change the rates. If there is no change in interest rates on June 4, this will be the sixth consecutive MPC meet in which key RBI rates will be retained at current levels. In the meeting, Governor Shaktikanta Das will announce the decisions of the MPC on June 4.
Experts believe that due to uncertainties related to Corona and fears related to inflation, RBI will not make any changes in its key rates. The repo rate is at 4%, which can remain at this. Because of this, the reverse repo rate will also remain at 3.5%.
The Reserve Bank is also less likely to change rates because it had said in its annual report released in May that the monetary policy for 2021-22 will depend on microeconomic conditions and inflation staying within the set target.
According to the estimates of RBI, further volatility can be seen in the Consumer Price Index (CPI) estimate. At the same time, the inflation rate of food items will depend on the monsoon. The report also said that the RBI will do its best to maintain liquidity at the right level during the financial year 2021-22 in line with its monetary policies. It will also focus on maintaining financial stability.
Aditi Nair of ICRA says that the conditions of the economy remain uncertain due to the current wave of Corona. Because of this, the Reserve Bank will not change the rates. Indian Bank MD CEO P. Chundru says that MPC will keep an eye on inflation. The economy is still not fully open due to the enforced lockdown due to Corona. In view of this, it seems that RBI will not make any changes in its rates.
The Reserve Bank has reduced the rates many times, but the banks do not pass on the full benefit to the customers. Since the last corona till now, the Reserve Bank has cut rates by more than 1.50%. However, the interest rates on loans at present are historically lowest and the same is true of your bank deposits. The lowest interest is getting on that too.
