Reserve Bank to maintain status quo on rates due to rise in Covid infections: Experts

NEW DELHI: A rapid surge in coronavirus cases and the government's recent mandate asking the RBI to keep retail inflation around 4 percent are likely to prompt the Central Bank to maintain status quo on policy rates at its first bi-monthly monetary policy review for the current fiscal, according to experts.

The Monetary Policy Committee (MPC), RBI's rate-setting panel, is also likely to maintain the policy stance accommodative at the next policy review to be unveiled on April 7, say experts. RBI Governor Shaktikanta Das headed six-member MPC is scheduled to meet from April 5 to 7. The policy meet outcome will be announced on April 7.

The RBI, experts feel, will wait for an opportune time to announce monetary action with a view to ensure the best possible outcome in terms of pushing growth without sacrificing the main objective of containing retail inflation at 4 percent with a margin of 2 percent on either side. The policy repo rate or the short-term lending rate is currently at 4 percent, and the reverse repo rate is 3.35 percent On the forthcoming monetary policy, Edelweiss Research said economic recovery is still uneven and the pace of improvement has slowed of late after sharp rebound from lows. Further, the recent rebound in Covid cases poses a fresh challenge.

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