RBI's interest rate setting panel starts three-day meet

The six-member MPC, headed by Reserve Bank of India (RBI) Governor Urjit Patel, is meeting for three days for the first time instead of the usual two days due to some administrative exigencies.

Published: 04th June 2018 06:01 PM  |   Last Updated: 04th June 2018 06:01 PM   |  A+A-

A security personnel member stands guard at the entrance of the Reserve Bank of India (RBI) headquarters in Mumbai, India, August 2, 2017. | Reuters

By PTI

MUMBAI: RBI's Monetary Policy Committee (MPC) today began 3-day meeting amid speculations that key interest rate may be hiked for the first time after four-and-half years on account of firming prices of crude oil and high inflation.

The six-member MPC, headed by Reserve Bank of India (RBI) Governor Urjit Patel, is meeting for three days for the first time instead of the usual two days due to some administrative exigencies.

The resolution of the second bi-monthly monetary policy meeting in the current financial year, 2018-19, will be made public on Wednesday afternoon.

It was in January 2014 that RBI had last raised the short-term lending rate (repo) to 8 per cent; since then it has either reduced it or maintained status quo.

The current repo rate stands at 6 per cent.

The 7-quarter high GDP growth rate of 7.7 per cent in the January-March quarter of 2017-18 and forecast of a normal monsoon have reduced the clamour for a cut in the benchmark lending rate (repo).

Retail inflation, a key data for RBI, has remained above 4 per cent since November 2017.

Besides, oil prices have been rising for the past few months.

While petrol in Delhi costs Rs 77.96 a litre, diesel is at Rs 68.97 per litre.

The government has mandated the RBI to restrict the retail inflation at 4 per cent (with a margin of +/- 2 per cent), while supporting growth.

Indicating hardening of the interest rate scenario, several major lenders including SBI, PNB and ICICI Bank have already raised their lending rates from June 1.

Some of the banks have also increased the deposit rates.

In the last MPC meet, held in April, RBI Deputy Governor and member of the panel Viral Acharya had indicated that he would vote for withdrawal of monetary accommodation in the June policy.

Another member Michael Patra had voted for a hike in repo rate but was overruled by majority that opted for status-quo.

Reversing the declining trend of three months, retail inflation inched up to 4.58 per cent in April.

The Wholesale Price Index (WPI) based inflation too rose to 3.18 per cent in April mainly on account of a spike in fuel prices.

Stay up to date on all the latest Business news with The New Indian Express App. Download now

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

Asian Games 2018