The Reserve Bank of India's (RBI's) Monetary Policy Committee's decision on repo rate, which it will release on April 5, may be impacted by a number of factors including inflation, economic growth and global macro environment. In the last policy announcement on February 8, the MPC left key repo rate- rate at which RBI lends to commercial banks- unchanged at 6.5% for the sixth consecutive time.
India's economic growth
Indian economy is on an upswing and growth forecasts also suggest a robust performance ahead.
Read more: RBI monetary policy outcome tomorrow: Time and other details you need to know
The World Bank said in its latest report that Indian economy is projected to grow at 7.5 per cent in 2024 revising its earlier projections for the same period by 1.2 per cent. It also said that growth in South Asia is expected to be at 6 per cent in 2024 driven mainly by India's economy. “In India, which accounts for the bulk of the region’s economy, output growth is expected to reach 7.5% in FY23/24 before returning to 6.6% over the medium term, with activity in services and industry expected to remain robust,” the bank said. This may result in the RBI adopting a cautious stance on rate adjustments.
Read more: RBI 90 years ceremony: PM Modi's praise for central bank's ‘commitment and professionalism'
Global macroeconomic conditions
The RBI's policy decision may be influenced by global economic trends, especially the US economy. The US Federal Reserve is expected to deliver its first cut in June while risks remain for the cut to happen later in the year as per a Reuters poll. Owing to this, the RBI might hold off on any significant rate cuts until at least July, JPMorgan predicted.
Inflation
Read more: RBI Monetary Policy Committee Meeting from April 3: What to expect on repo rate
{{/usCountry}}The RBI's policy decision may be influenced by global economic trends, especially the US economy. The US Federal Reserve is expected to deliver its first cut in June while risks remain for the cut to happen later in the year as per a Reuters poll. Owing to this, the RBI might hold off on any significant rate cuts until at least July, JPMorgan predicted.
Inflation
Read more: RBI Monetary Policy Committee Meeting from April 3: What to expect on repo rate
{{/usCountry}}Inflation for February is at 5.09% and is expected to remain within the 2%–6% target, which could prompt the central bank to maintain or slightly adjust interest rates to support economic growth.
Crude oil prices
Crude oil prices have been impacted by geopolitical tensions amid Israel-Hamas war. As the prices are expected to remain elevated, the RBI will need to account for the impact of the same on inflation.