Reserve Bank monetary policy August 8: The Reserve Bank (RBI) will announce the monetary policy on August 8. According to a Moneycontrol poll, the Monetary Policy Committee will not make any change in the policy rate in the August monetary review, as inflation is still above the central bank’s comfort zone. 20 economists and bankers were included in this poll. Here we are telling you about some important aspects related to the monetary policy.
Repo Rate
Repo rate is the rate at which RBI gives loans to banks for short term. Currently, the repo rate is 6.5 percent. The central bank has not made any change in it after April 2023. Will the Monetary Policy Committee change the repo rate this time? The answer is – probably not. Most of the economists and bankers involved in Moneycontrol’s poll said that the central bank will not make any change in the policy rate at present. If this happens, it will be the ninth consecutive time when the central bank will not tamper with the interest rates.
Most economists and bankers say that the Reserve Bank will not change the inflation forecast in the upcoming policy, but is cautious about the risk due to food inflation. Inflation in India reached a four-month high of 5.08 percent in June, while it was at 4.75 percent in the previous month. In the June monetary policy, the central bank had projected CPI inflation to be 4.5 percent for the current financial year. Under this, inflation was projected to be 4.9 percent in the first quarter, 3.8 percent in the second quarter, 4.6 percent in the third quarter and 4.5 percent in the fourth quarter.
Liquidity Measures
Money market experts believe that the central bank will continue to remove temporary liquidity from the banking system. However, it has a lot of surplus. A fund manager said that the Reserve Bank has many tools to remove excess liquidity. However, looking at the CD ratio and the activism of bankers for deposits, it can be said that the Reserve Bank will continue to remove temporary liquidity. Currently, the banking system has a surplus liquidity of Rs 2.79 lakh crore.
