RBI Likely To Maintain Status Quo On Interest Rates In Upcoming Monetary Policy: SBI Chairman

This indication comes after the RBI's MCP decided to keep the key interest rate unchanged, focusing on moderating inflation and monitoring the monsoon

The Reserve Bank of India (RBI) is expected to maintain a status quo in the upcoming monetary policy review meeting, according to State Bank of India (SBI) Chairman Dinesh Khara. The next meeting of the RBI's Monetary Policy Committee is scheduled to take place from August 8-10, 2023. "As a bank we don't expect rate cut, status quo is likely to be maintained by the RBI," SBI Chairman said at an event organised by industry body CII here, reported PTI. 

This indication comes after the RBI's MCP decided to keep the key interest rate unchanged, focusing on moderating inflation and monitoring the monsoon.  The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained a status quo on interest rates, keeping it unchanged at 6.5 per cent.

This after a series of rate hikes totaling 250 basis points since May 2022, with the committee pausing rate changes since April. RBI Governor Shaktikanta Das announced the unanimous decision, acknowledging that headline inflation in India remains above the central bank's target of 4 per cent and is expected to stay elevated throughout the year.

Out of the six members of the MPC, five voted in favor of continuing the gradual withdrawal of accommodation to ensure inflation gradually aligns with the target while supporting economic growth. However, one member, Jayanth Varma, expressed reservations regarding the stance.

Retail inflation in India rose to a three-month high of 4.81 per cent in June from 4.25 per cent in May, according to data from the Ministry of Statistics and Programme Implementation. The previous high CPI was in March at 5.66 per cent.

In a recent, article titled "State of the economy" published in the RBI's July bulletin, the central bank highlighted that the surge in food prices, which contributed to higher inflation in June, aligns with the MPC's view that the fight against inflation is ongoing. 

“Food price spikes typical of the onset of the monsoon drove up headline inflation in June, corroborating the monetary policy committee’s (MPC) view that the fight against inflation is far from over and monetary policy has to stay the course on the arduous last leg of the journey to align inflation with the target," said the article.