RBI To Maintain Status Quo On Rate Cuts Amid Optimistic Growth In March Quarter: Report

RBI Monetary Policy Preview: According to credit rating agency Brickwork Ratings, RBI's committee is likely to maintain the status quo on lending rates in view of optimistic growth in the March quarter.

The Reserve Bank of India (RBI) Governor Shaktikanata Das-led Monetary Policy Committee (MPC) began its three-day deliberations on Wednesday, June 2, as economists and rating agencies expect the maintenance of status quo on benchmark rates, amid the severity of the second wave of the COVID-19 pandemic. According to credit rating agency Brickwork Ratings, the central bank's rate-setting committee is likely to maintain the status quo on lending rates in view of optimistic growth in the March quarter. (Also Read: Reserve Bank Of India Expected To Keep Rates Steady, May Take Take Liquidity Measures )  Dr M Govinda Rao, Chief Economic Advisor of Brickwork Ratings said that the Reserve Bank is likely to continue with G-sap auctions in order to maintain the yields on government securities in check. He expects that the inflation rate may remain close to the upper bound target of six per cent in the near term. The central bank's committee may continue to pause on the interest rates by maintaining the accommodative stance to support growth as long as inflation remains within the target range of the monetary policy framework, he explained.  ''The better-than-expected GDP numbers provide much-needed comfort to the MPC on the growth outlook. With the imposition of partial lockdown-like restrictions to contain the virus spread in several parts of the country, the downside risk on growth recovery has intensified....Considering the risk of inflation emanating from the rising commodity prices and input costs, Brickwork Rating expects the RBI MPC to adopt a cautious approach and hold the repo rate at four per cent,'' said Dr Rao.