RBI Monetary Policy LIVE: Reserve Bank of India Governor Shaktikanta Das will shortly announce the outcome of the Monetary Policy Committee meeting today, wherein the MPC is likely to vote to keep repo and other key interest rates steady despite mounting inflation concerns. This is the first bi-monthly monetary policy of FY23. In the last 10 meetings, the MPC left the interest rate unchanged and maintained an accommodative monetary policy stance. The repo rate was last cut on 22 May 2020 on the back covid-induced nationwide lockdown. Since then, the rate remains at a historic low of 4 per cent. The government has mandated the central bank to keep the inflation at 4 per cent, with an upper and lower tolerance level of 2 per cent. The Reserve Bank’s Monetary Policy Committee (MPC) will meet six times this financial year. The next bi-monthly monetary policy of 2022-23 will be held during June 6-8.

“Today RBI monetary policy, the key focus will be on whether RBI changes its stance or not. USDINR volatility and with it cross currency volatility will depend on this factor. If RBI keeps stance accommodative, then volatility can be low post policy, but if they alter stance, volatility can increase,” Kotak Securities said.

Since the pandemic, the RBI has continued to maintain an accommodative stance prioritising a sustained economic growth recovery. Currently, India’s key growth indicators are at a nascent stage of recovery and there is still a slack in the economy. The escalating inflation in the economy arising from global commodity price rise and its transmission to the consumer prices would further add downward pressure to domestic growth trajectory. Thus, amidst the inflationary pressure and growth uncertainty, in our view the RBI is likely to keep the key policy rate unchanged in its April 2022 review. We reckon that the real estate industry has seen a remarkable improvement mainly on account of low interest rates and hence hope that any policy change action is nuanced and gradual allowing prospective buyers to recalibrate their property purchase decisions without much disruption. 

We believe that RBI and has a challenging task at hand. Growth recovery is still uneven and due to various reasons like high oil prices, supply chain disruption, cost pressures are building up thereby leading to sticky core inflation. Given that on one hand uncertainty around the Covid variants continue and growth is still uneven, inflationary expectations remain high and globally central banks are withdrawing easy monetary policy, against this backdrop, we expect the RBI to continue its path of policy normalization but, rather slowly. As food inflation is likely to be benign, we expect the RBI to hike reverse repo rate first and then may be towards the second half of 2022 there could be a hike in repo rate as well. 

All eyes are on Reserve Bank of India's monetary policy decision which will be announced by Governor Shaktikanta Das today at 10 AM. Economists are expecting RBI's monetary policy committee to stick with an accommodative stance in order to support economic recovery. The announcement from the governor will be followed by a press conference at 12 pm.