Under pressure to bring down retail inflation and keep pace with global peers, the Reserve Bank of India (RBI) is likely to go in for 25 basis points hike in benchmark interest rate, probably the last in the current monetary tightening cycle that began in May 2022, at the bi-monthly policy to be unveiled on Thursday.
The Monetary Policy Committee (MPC) of the Reserve Bank will be meeting for three days on April 3, 5 and 6 to take into account various domestic and global factors before coming out with the first bi-monthly monetary policy for fiscal 2023- 24. The Reserve Bank of India (RBI) has already increased the repo rate by a total of 250 basis points since May in a bid to contain inflation though it has continued to remain above the central bank's comfort zone of 6 percent for most of the time.
The two key factors which the RBI Governor headed committee will deliberate intensely while firming up the next monetary policy viz. elevated retail inflation and the recent action taken by central banks of developed nations especially the US Federal Reserve, the European Central Bank and Bank of England. Having remained below six per cent for two months (November and December 2022), the retail inflation breached the comfort zone warranting action by the Reserve Bank of India. The CPI-based inflation was 6.52 per cent in January and 6.44 per cent in February.
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