The Reserve Bank of India (RBI) will maintain the policy Repo Rate at 6.5 per cent during its upcoming June 8 announcement, anticipate experts. They reason out that easing of retail inflation in April and potential for further decline may prompt the central bank to pause on the rate hike.

Headed by RBI Governor Shaktikanta Das, a meeting of the six-member Monetary Policy Committee (MPC) is scheduled for June 6-8. The decision of the 43^rd meeting of the MPC would be announced on June 8. 

After the last MPC meeting in April, the RBI had paused its rate hike cycle and stayed with the 6.5 per cent Repo Rate. Prior to that, the central bank had cumulatively hiked the Repo Rate by 250 basis points since May 2022 in a bid to contain inflation. 

The MPC is meeting in the backdrop of Consumer Price Index (CPI)-based inflation declining to an 18-month low of 4.7 per cent in April. The RBI chief had recently indicated that the May print would be lower than the April numbers. The CPI for May is scheduled to be announced on June 12. 

Bank of Baroda Chief Economist Madan Sabnavis notes that the RBI is most likely to continue to pause on the interest rates and retain Repo Rate at 6.5 per cent. ”The reason is that inflation has come in lower than 5 per cent in April and will be even lower in May. This being the case, the view would be that past Repo Rate actions have had an effect on inflation and hence there can be another pause taken,” he adds. 

“As far as bankers are concerned, I would only say that RBI’s Repo Rate has already been increased by 2.5 per cent. Expectations from the market or the banking side are that we do not expect that any rise in the Repo Rate would be there because already the interest rate has been raised by 2.5 per cent on the Repo side and inflation is moderate,” Bank of India Managing Director Rajneesh Karnatak has told the PTI. 

Echoing his views, Bank of Maharashtra Executive Director Asheesh Pandey opines that the RBI will continue its stance of wait and watch before tinkering with rate. Keeping inflation, liquidity in the banking system and recent GDP number into consideration, it seems that the RBI is likely to maintain pause as far as interest rate is concerned, adds Mr Pandey.