Inflation and EMI, churning of RBI continues. RBI's MPC meeting continues for the second day on Wednesday. On Thursday, the RBI governor will present the results of the MPC meeting. Till now many agencies, polls, experts and a panel of economists have expressed the possibility that RBI will press the pause button on interest rates for the second time in a row. At the same time, it will try to give a message to the rest of the Central Banks of the world, including the Fed, that the time has come to give relief to the common people from rising interest rates. The reason for this is also because next week the Fed is also going to announce the rates and ahead of that Britain and the European Union will also announce the interest rates. By the way, in the report of the World Bank on Tuesday, the estimate of GDP growth for the current financial year has been reduced marginally and the global growth has been cut by one percent. The MPC will also take these figures into consideration.
Is inflation still a threat to India?
First in the month of March and then in the month of April, the figures of retail inflation have brought a lot of relief to the RBI and the country. The effect of which was that it helped in stopping the April interest rate cycle. On the other hand, if we talk about May, the inflation figures are expected to be even better than that of April. Due to which speculations are being made that RBI may revise or rather upgrade the estimated figures of MPC inflation. The inflation figures for the first quarter of the current financial year can be slightly reduced and the estimated inflation figures for the financial year can be reduced. The inflation rate was 5.6 percent in the month of March and 4.7 percent in the month of April. Retail inflation figures can be seen in the range of 4.20 per cent to 4.50 per cent in May.
Has the World Bank report increased concern?
Not much time has passed when the real GDP figures were revealed in the NSO report. Which appeared better than the estimates of RBI and the government. Real GDP was 6.1 percent in the fourth quarter of the last financial year and this figure was seen at 7.2 percent in the financial year. The report of the World Bank has come on Tuesday. Which has reduced India's estimate of economic growth for the current financial year. Which is a big blow for the RBI along with the government. Because this time RBI was considering upgrading the estimated economic growth for the current financial year. RBI MPC can reconsider this front after the arrival of World Bank report.
Pause button can remain pressed till the end of the year
In the coming days, the hawkish stance of the RBI MPC will depend on the effect of El Nino on the country's agriculture sector and how the monsoon prevails in the country. If the monsoon is fine and supports agriculture, then forget that interest rates increase, but if the monsoon is even a little here and there, then the effect of El Nino can be seen and agricultural production can also be affected. Because of which inflation will increase in the country and interest rates will increase. But the thing to note is whether in such a situation the inflation rate goes beyond the tolerance level of RBI of 6 percent or not. If inflation is more than 6 percent then there will be no option left in front of RBI and if inflation rate remains low then no effect will be seen in interest rates. It is speculated that in view of the present circumstances, the interest rates may remain frozen till the December cycle of 7th.
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