RBI likely to maintain status quo on rates in April MPC meeting, says SBI Research
1 min read 27 Mar 2023, 06:24 PM ISTThe RBI's next monetary policy meeting is scheduled for the first week of April 2023
PremiumWhile many market participants expect the Reserve Bank of India (RBI) to go for one more 25 basis-point (bps) hike before a prolonged pause, the country's largest lender State Bank of India (SBI) Research expects a status quo on rates.
The central bank is expected to pause their interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now, SBI Research said in its latest Ecowrap report.
The RBI has raised the repo rate by 250 bps to 6.50 per cent in the current fiscal. The repo rate is the interest rate at which the central bank lends money to all commercial banks.
The RBI's next monetary policy meeting is scheduled for the first week of April 2023.
"The (RBI's) stance could continue to be withdrawal of accommodation, even as liquidity is now in deficit mode. RBI can always keep the options open in June (monetary) policy," the report authored by Group Chief Economic Adviser Soumya Kanti Ghosh noted.
The report asserted that the RBI has enough reasons to pause the repo rate hike in the April meeting.
'RBI should pause, think about decoupling from Fed'
The SBI group chief economic adviser had earlier said that the RBI should "pause and think" if it can continue mirroring the US Federal Reserve "stroke by stroke" in terms of rate hikes or decouple from the American central bank.
While speaking at a session organised by the Bharat Chamber of Commerce in Kolkata, Ghosh had said that he doesn't see an end to the rate hike cycle of the Fed in the short-term, which makes a case for the RBI to contemplate about decoupling.
"My point is can we match the Fed stroke by stroke? At some point of time we need to pause and think whether the impact of the earlier rate hikes (by the RBI) has percolated down into the system... I don't see any end to the Fed's cycle soon, it could be three or more rate hikes going ahead," he stated.
