RBI unlikely to cut repo rate on August 8 monetary policy: Experts

New Delhi [India], August 5 (ANI): The Reserve Bank of India (RBI) is unlikely to change the repo rate, say experts. The three-day monetary policy committee (MPC) meeting to decide on policy rates begins tomorrow, August 6.

The RBI’s repo rate, currently at 6.5 per cent since it was last increased in February 2023, is widely anticipated to remain unchanged for the ninth consecutive bi-monthly policy review says experts.

“Our take is that the MPC’s stance in the forthcoming Policy will continue to be “withdrawal of accommodation” and the Repo Rate (last changed in February 2023) will be kept unchanged for the ninth consecutive time” said Manoranjan Sharma, Chief Economist, Infomerics Ratings pre-policy expectations.

The Monetary Policy Committee (MPC), chaired by Governor Das, is set to convene in Mumbai this week to deliberate on key policy decisions amidst a challenging economic landscape.

The central bank’s stance on the benchmark interest rate has garnered significant attention, particularly given the persistent inflationary pressures, especially in the food sector.

RBI Governor Shaktikanta Das had indicated in the last policy briefing that food inflation is still a concern and the regulator is in no hurry to take a decision on rate cut.

Recently a SBI report also noted that the Consumer Price Inflation in India is expected to remain around 5 per cent in the financial year 2024-25 except for September and October month

The consumer price inflation (CPI) for agricultural labourers and rural labourers has surged to 7.02 per cent and 7.04 per cent year-on-year respectively in June 2024, as per latest data from the Union Ministry of Labour and Employment.

The inflation for rural labourers has been on an upward trajectory for the past two months. In April, it was pegged at 6.96 per cent and went up to 7.02 per cent in May. For June inflation for rural labourers has surged further to 7.04 per cent.

“Despite 7-8 percent steady growth in Asia’s third-largest economy (India), all is not well on the inflation front-not by a long shot. These concerns are manifested in inflation breaching the 5 per cent mark in June 2024 (a five-month high of 5.08 per cent in June 2024) and persistently sticky food inflation despite continuously declining core inflation” added Sharma

The wholesale inflation in India, as measured by the Wholesale Price Index (WPI), rose to 3.36 pc (Provisional) in June from 2.61 pc in May, according to the official data released by the Commerce Ministry.

The increase is largely due to higher prices in various categories including food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, and other manufacturing sectors.