Today is the last day on the meeting of the three -day monetary policy under the leadership of RBI's new Governor Sanjay Malhotra. After a few hours, RBI Governor will estimate the policy rate. By the way, this decision is not going to be easy for the new RBI Governor Sanjay Malhotra. The biggest question before them is whether that policy rate i.e. repo rate i.e. loan EMI or not. This confusion is not like this. There are two major reasons for that. The first reason is the fall in the rupee, which promotes imported inflation. The second most important reason has not yet reached the 4 per cent level of RBI. The country's retail inflation still remains above 5 percent.
However, the expert has expressed the possibility that the MPC may decide to cut the repo rate by 0.25 percent after a gap of about five years. The repo rate remains stable at 6.50 percent for two years. The Reserve Bank of India (RBI) had last reduced the repo rate to four percent at the time of Covid-19 epidemic in May 2020. Then to deal with the risks of Russia-Ukraine War, RBI started increasing the rates in May, 2022 and the series stopped in February 2023. This meeting of MPC is the first bilateral review meeting to be subjected to the new Governor of RBI. Malhotra was made the new Governor of RBI after Shaktikant Das's six -year term was completed in December. Let us also tell you what the information is saying in this matter?
Senior economist Radhika Rao of DBS Group Research said that we hope that the MPC will vote in favor of bringing it to 6.25 percent by cutting the repo rate by 0.25 percent. Global research firm Bank of America Global Research also said that both economic growth and inflation figures point to the need to make monetary conditions easier. It is expected that the decision to reduce the interest rate 0.25 percent will be taken unanimously.
Udyog Mandal Assocham also said that there are widespread expectations to bring it to 6.25 percent by cutting the policy rate. A report by SBI Research says that the interest rate is expected to be reduced by 0.25 percent in monetary review. However, Amar Ambani, executive director of Yes Securities, said, 'We do not expect to cut rates by RBI in this meeting. Actually global conditions remain unfavorable to cut rates at this level.
If the guess of experts is correct, then after 56 months, the people of the country can see great relief. In May 2020, RBI MPC reduced the repo rate to 4 per cent in May 2020. It was then a period of Kovid and it became a compulsion to reduce the loans of Housing and Real Estate sector to reduce the rates of EMI. After that, all banks started reducing the rates of home loan. After that the war started between Russia and Ukraine. Due to which there was a lot of hurdle in the supply of crude oil and food items in the world and inflation was seen at the global level and it was also seen on India. Then after two years, May 2022 interest started increasing.
The special thing is that from May 2022 to February 2023, interest rates were increased by 2.50 percent and the repo rate was brought to 6.50 percent. After that, there has been no change in interest rates for almost two years. The last time in February 2023, interest rates were increased by 0.25 percent. RBI Governor Shaktikanta Das kept the freezing button at constant interest rates. By the way, pressure was being made by the central government to reduce the interest rates continuously. This is the reason that there is pressure on the new RBI governor to reduce interest rates. That too at a time when the rupee is below at a record level against the dollar in the country.
