RBI MPC August 2023: The monetary policy committee of the Reserve Bank decides to reduce, increase or keep the interest rates stable, whose fresh meeting is going to start from tomorrow…
The meeting of the Monetary Policy Committee of the Reserve Bank is going to start tomorrow from Tuesday. A decision regarding interest rates will be taken in this meeting of MPC starting from 8th August. In this meeting, it will be decided whether you get any relief from the increased EMI burden or you have to prepare to pay more interest than before every month.
Inflation started raising concern again
This meeting of the Reserve Bank’s Monetary Policy Committee is starting at a time when inflation has once again started raising concerns. In such a situation, the danger has increased that the Reserve Bank may again decide to increase the policy rate i.e. the repo rate. However, before this, in two consecutive meetings, the Reserve Bank had kept the repo rate stable and now it was expected that after a year-and-a-half boom, now the repo rate could be reduced.
Results will be revealed on August 10
The meeting of the six-member Monetary Policy Committee headed by the RBI governor will continue till August 10. After that, Governor Shaktikanta Das will inform about the decisions taken in the MPC meeting on Thursday, August 10. If the repo rate is increased in the Reserve Bank’s MPC, then the EMI burden will increase on you every month. On the other hand, if the repo rate is cut, the banks giving you loans will also reduce the interest rates.
Repo rate hike from May 2022
RBI started the process of increasing the interest rate in May last year. The Reserve Bank had called an emergency meeting of the Monetary Policy Committee in May 2022. After that, in a hurry, the MPC had decided to increase the repo rate. Before May 2022, the repo rate remained at 4 percent for a long time. After that, the Reserve Bank increased it continuously and the repo rate was increased by 2.50 percent in a span of one year.
Now the rate of retail inflation is
Right now the repo rate of the Reserve Bank is 6.5 percent. The repo rate has not been increased since February 2023. Before the meeting starting tomorrow, during the current financial year, two policy reviews of the Reserve Bank have been done in April and June and the policy rate has been kept constant in both. In fact, the decrease in the retail inflation rate was helping the Reserve Bank to decide to keep the repo rate stable, but since the last 1-2 months, inflation is increasing again. During the month of June, the retail inflation rate reached a three-month high of 4.81 percent.
What is the opinion of experts in this matter
However, even after this, many experts are saying that the Reserve Bank can maintain the trend of the last two times of not making changes in the August meeting. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says that the Reserve Bank will be worried about the increased inflation, but it will not affect the result much, because it is due to seasonal reasons. The economy is showing strong growth and the RBI would not like to disturb that.
On the other hand, Deepak Jasani, Head of Retail Research, HDFC Securities, says, there was a slight increase in retail inflation in June and the main reason for this is the increase in the prices of vegetables and pulses. In such a situation, the Reserve Bank will not be in any hurry, neither in reducing the rates nor in changing the stance. Inflation may remain high in July and August as well. Oil prices have also started increasing. However, we do not expect the Reserve Bank to return to the path of increasing the repo rate in the August meeting.
