NEW DELHI: The country’s central bank may have to do a course correction in the forthcoming Monetary Policy Committee meeting slated from April 6-8. Experts believe that it would not only have to revise upwards its inflation estimates but also have to change its stance from accommodative to neutral in view of the evolving conditions.
“We would expect the MPC to review the earlier forecasts of both growth and inflation for 2022-23. Growth is likely to be revised downwards while inflation would be probably at least 100 bps higher,” says Madan Sabnavis, Chief Economist, Bank of Baroda.
In its February policy statement, the RBI had pegged the 2022-23 inflation at 4.5%, 50 basis points (bps) lower than previously estimated. It had also spelled out a much more dovish monetary policy stance than expected.
However, owing to the geopolitical tensions between Russia and Ukraine, the situation has changed drastically with fuel prices again going through the roofs. Petrol and diesel prices have been hiked `8.4 a litre in the past fortnight. CNG and PNG prices have also been hiked.
“With inflation rising prodigiously, there should be active consideration of change in stance from accommodative to neutral,” adds Sabnavis of BoB.Though most experts believe that repo rate hike would take time to materialise.