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RBI Monetary Policy meet: 5 factors that may impact central bank’s repo rate decision

The Reserve Bank of India’s (RBI’s) Monetary Policy Committee’s decision on repo rate, which it will release on April 5, may be impacted by a number of factors including inflation, economic growth and global macro environment. In the last policy announcement on February 8, the MPC left key repo rate- rate at which RBI lends to commercial banks- unchanged at 6.5% for the sixth consecutive time.

A security official walks past an emblem of the Reserve Bank of India at the RBI headquarters, in Mumbai. The Monetary Policy Committee panel is led by RBI governor Shaktikanta Das and consists of a total of six members.

India’s economic growth

Indian economy is on an upswing and growth forecasts also suggest a robust performance ahead.

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The World Bank said in its latest report that Indian economy is projected to grow at 7.5 per cent in 2024 revising its earlier projections for the same period by 1.2 per cent. It also said that growth in South Asia is expected to be at 6 per cent in 2024 driven mainly by India’s economy. “In India, which accounts for the bulk of the region’s economy, output growth is expected to reach 7.5% in FY23/24 before returning to 6.6% over the medium term, with activity in services and industry expected to remain robust,” the bank said. This may result in the RBI adopting a cautious stance on rate adjustments.

Global macroeconomic conditions

The RBI’s policy decision may be influenced by global economic trends, especially the US economy. The US Federal Reserve is expected to deliver its first cut in June while risks remain for the cut to happen later in the year as per a Reuters poll. Owing to this, the RBI might hold off on any significant rate cuts until at least July, JPMorgan predicted.


Inflation for February is at 5.09% and is expected to remain within the 2%–6% target, which could prompt the central bank to maintain or slightly adjust interest rates to support economic growth.

Crude oil prices

Crude oil prices have been impacted by geopolitical tensions amid Israel-Hamas war. As the prices are expected to remain elevated, the RBI will need to account for the impact of the same on inflation.

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