Mumbai: A monetary policy review meeting of RBI’s Monetary Policy Committee (MPC) under the chairmanship of Reserve Bank of India (RBI) new Governor Sanjay Malhotra began here yesterday. It is expected that Malhotra will start cuts in the repo rate after a gap of about five years in his first meeting.
The repo rate, which is currently 6.50 percent, will be reduced to 5 percent to 6.25 percent. A banker reported that the situation has become favorable for cuts in the repo rate due to a decline in inflation and softening of economic growth.
In May 2020, the Reserve Bank reduced the repo rate to 4 percent during the Corona epidemic. After this, the repo rate was steadily increased, causing it to 6.50 percent by February 2023 and since then the repo rate has remained at a high level.
Former Reserve Bank of India Governor Shaktikanta Das retained the repo rate for two consecutive years, as overall inflation remained high due to high prices of foods. The MPC meeting has started from 5 February under the leadership of Sanjay Malhotra, who has replaced Das after his retirement and Malhotra will announce the decisions of the meeting tomorrow.
An analyst stated that Malhotra would start cutting interest rates in view of the challenging global environment and the decline in inflation against the dollar and the decline in inflation.
Another banker said that Finance Minister Nirmala Sitharaman has presented a budget that is expected to promote economic growth in the country, but now it is the responsibility of the Reserve Bank to support their efforts. The Finance Minister has tried to increase the demand demand in the country by increasing the income tax exemption limit. He also said that in such a situation it is necessary to ensure that loans are available at low rates to consumers and industries. He also said that he expects a 5 percent cut in the repo rate.
