New Delhi [India], April 4 : The monetary policy committee of the Reserve Bank of India, as it announces the outcome of the ongoing policy meeting on Thursday morning, is likely to hike the repo rate by 25 basis points (100 basis points is equivalent to 1 percentage point), according to advisory firm Emkay Global Financial Services.
"In addition (to the rate hike), the neutral stance will give the MPC flexibility to be non-committal on forward guidance, yet subtly give direction on a 'pause'," Emkay said in a report.
At the global level, it said that even as global monetary policy tightening is expected to unfold, the anticipation of a near-ending interest rate hike cycle in the western economies has somewhat eased financial conditions.
"This hints at emerging markets Asia central banks (including the RBI), which were somewhat being strong-armed by the West, being able to breathe easier," it said.
The three-day Reserve Bank of India's monetary policy committee meeting, the first in 2023-24, which started Monday, will deliver its outcome on Thursday. Today is a government holiday on account of Mahavir Jayanti.
At the latest Monetary Policy Committee (MPC) of the RBI in early February, it decided to raise the repo rate by 25 basis points to 6.5 per cent to manage inflation.
So far, RBI has raised the repo rate, the rate at which it lends to banks, by 250 basis points cumulatively since May 2022. Raising interest rates is a monetary policy instrument that typically helps suppress demand in economy, thereby helping the inflation rate decline.
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