RBI’s MPC meets amid hopes for status quo in policy rate
MUMBAI: The Reserve Bank’s rate-setting panel began its three-day deliberations on Monday to decide the next monetary policy amid expectations that the central bank will maintain status quo on the benchmark interest rate in the backdrop of global scare due to the new coronavirus variant Omicron.
Reserve Bank governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) is scheduled to announce the policy resolution on Wednesday.
If the RBI maintains status quo in policy rates on Wednesday, it would be the ninth consecutive time since the rate remains unchanged. The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
On his expectation from the MPC, Dhruv Agarwala, group CEO, Housing.com, Makaan.com and Proptiger.com, said that while the Indian economy is now well on its way towards much-awaited normalcy, it has yet a long way to go before the government and its agencies can start gradually pulling back support measures.
“With that being the basic premise, we expect the RBI to continue to hold the repo rate at the current levels,” he said.
According to him, a low home loan interest rate regime has been greatly instrumental in helping revive India’s real estate sector, especially during the festive season.
“We expect the growth momentum in the sector to continue because of no upward changes in the repo rate. Some increase in the reverse repo rate, however, might be on the cards,” Agarwala added.
V Swaminathan, CEO, Andromeda and Apnapaisa, said the MPC is likely to take a pause this time around as the new coronavirus variant Omicron has created an atmosphere of uncertainty.
“The RBI will likely wait for the mitigation of the current COVID-19 variant to understand the risks better. If the growth impact of the new variant is diminished fast, we may expect an increase in the reverse repo rates from February,” he added.
The Indian economy remained on track to post the fastest growth among major economies this year as its GDP expanded by a better-than-expected 8.4% in the July-September quarter to cross pre-pandemic levels.