The Reserve Bank of India's rate-setting panel began discussions on Wednesday to finalise the next bi-monthly monetary policy, amid predictions that it will keep the interest rate unchanged but shift its monetary policy stance in response to rising inflation due to geopolitical developments.

The RBI's Monetary Policy Committee (MPC), chaired by Governor Shaktikanta Das, is convening for the first time this fiscal year. The meeting will take place from April 6 to 8, with the results being released on April 8.

The MPC has kept the interest rate steady and maintained an accommodating monetary policy stance in the last ten meetings. On May 22, 2020, the repo rate, or short-term lending rate, was last reduced. Since then, the rate has remained at an all-time low of 4%.

The State Bank of India (SBI) indicated in a study released this week that the central bank may significantly raise inflation predictions for fiscal 2022-23 while simultaneously lowering growth projections. It expects the RBI to keep the short-term lending rate standstill in place (repo).

Real rates have been negative for a long time and "the RBI may want to strike a discordant note by emphasising inflation as a threat while also emphasising that it is completely grasped of it!" PHD Chamber President Pradeep Multani said on Wednesday that the economy is still recovering from the devastating effects of the coronavirus pandemic, and that an accommodating policy approach is necessary at this time to improve the economy's fundamentals.

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