: RBI likely to maintain status quo on rates to support growth, say analysts #IndiaNEWS #Business Mumbai: The Reserve Bank is likely to maintain status quo on interest rates in its forthcoming monetary

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RBI likely to maintain status quo on rates to support growth, say analysts #IndiaNEWS #Business
Mumbai: The Reserve Bank is likely to maintain status quo on interest rates in its forthcoming monetary policy review but may change the stance in view of retail inflation piercing its upper tolerance limit, global uncertainties created by the ongoing Russia-Ukraine war, and the urgency to protect and boost growth, feel experts.
The RBI Governor-headed rate setting panel Monetary Policy Committee (MPC) will be holding its first meeting of the 2022-23 fiscal from April 6 to 8. The outcome will be announced on April 8.
Aditi Nayar, Chief Economist of ICRA Limited, said in the April 2022 policy review, the MPC is expected to revise up its Consumer Price Index-based inflation forecast, whereas the growth projections for 2022-23 would be pared.
Nevertheless, the MPC is unlikely to sacrifice growth to control imported inflation. With the upper threshold of the medium-term inflation target range being as high as 6 per cent, the MPC is likely to remain growth supportive for longer than other central banks. Overall, we expect a status quo policy in April 2022, she said.
Given the current uncertainties, Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, opined that RBI “has limited scope to tighten monetary policy.
Amidst the deleterious impact of the war, the RBI will be walking a tightrope on its monetary policy decisions, striving to control inflation within the tolerance band while at the same time supporting nascent growth impulses, he said.
Going forward, we expect the RBI to restore the width of the LAF corridor to its pre-pandemic levels by hiking the reverse repo rate by 40 bps over Jun-Aug 2022 policy review, followed by a cumulative 50 bps hike in the repo rate in the rest of 2022-23, Chowdhury said.
On the other hand, Dhruv Agarwala, Group CEO, Housing. com, Makaan. com & PropTiger. com, opined that given the increase in inflationary pressure due to the war in Ukraine, it will be difficult for the RBI to continue maintaining a status quo on key policy rates in its upcoming monetary policy.
While this would hurt the recovery process in India post the disruptions caused by the various waves of the coronavirus pandemic, the RBI may not have the flexibility to avoid a rate hike, he said.
Agarwala further said any upward tweak at this stage might have an impact on real estate as well, but the numbers for the March quarter, show that the real estate sector is on a strong footing and may continue to cover the lost ground due to the pandemic on the back of strong pent-up demand.
Japanese brokerage Nomura in a research report said the RBI is likely to re-evaluate its projection for both GDP growth and CPI inflation in the upcoming policy meeting.

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