The meeting of the Reserve Bank of India (RBI) Monetary Policy Committee (MPC Meeting) started from April 5, which will end today. It is expected that the central bank may take some concrete decisions to support the Indian Economy amid the boom in the cases of Kovid-19.
New Delhi. The meeting of the Reserve Bank of India (RBI) Monetary Policy Committee (MPC Meeting) started on 5 April 2021, which will end today i.e. 7 April 2021. After this, the first RBI policy for the financial year 2021-22 will be introduced. It remains to be seen what decision the central bank takes to support the country’s economy amid the boom in positive cases of corona virus. Let us try to know how the Reserve Bank’s view of retail inflation and rate cut can be.
Increasing the pace of economic growth will remain the top priority
The second wave of the Corona epidemic presents challenges for economic growth. At the same time, government borrowing and rising bond yields are also a big challenge for RBI. Fuel Inflation stood at 6.94 percent in February. Similarly, Core Inflation was also at the level of 5.36 percent. These two figures were on the top of 2 years. Experts say that increasing the pace of economic growth will be the top priority for the central bank. In such a situation, a rate cut cannot be expected. Let me tell you that the reverse repo rate is currently 3.35 percent and the repo rate is at 4 percent. At the same time, the CRR has been increased from 3 percent to 3.5 percent with effect from 27 March 2021.
Retail inflation may reach 5.2 percent by September
Saugata Bhattacharya of Axis Bank says that there is no hope of a change in rates. However, the guidance is expected to be slightly softer than last time. During April-September 2021, retail inflation can be between 5-5.2 per cent. He said that policy rates can be expected to be cut in case of lockdown. Jayesh Mehta of Bank of America says that the second wave of corona virus is expected to soften the bond yields. Bond yield is estimated to be 6-6.3 percent for 10 years. It may fall when growth falls in lockdown. Increasing growth will be a priority for RBI. The market wants the discount in the maturity rules to continue till 2024.
Growth estimates down already, no need to cut
DK Joshi of CRISIL says that other agencies have increased India’s growth outlook, but the RBI can maintain its estimate at 10.5 per cent. Due to the second wave of Corona, RBI may keep growth estimates low. The RBI can assure the bond market on the government’s borrowings. He also said that the growth slowed down in March 2021. Aditi Nair of ICRA (ICRA) says that RBI will probably keep the guidance soft in the next two policies. RBI can remain soft until all adults receive the vaccine. Growth estimates are already down significantly. There is no need to cut them. Lakshmi Iyer of Kotak Mahindra AMC says that the RBI’s estimate of inflation will be watched.
