In view of high inflation, the Reserve Bank will not cut interest rates in its next meeting

Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India is likely to maintain interest rates in its meeting next week. Analysts believe that the Reserve Bank will not rush to reduce the repo rate as inflation is still around five percent. Retail inflation is around five percent due to high prices of food items.

The Reserve Bank's target is to reduce inflation to four percent. But food prices remain high due to high prices of tomatoes, potatoes, onions and other vegetables. Inflation was 5.08 percent in June.

A banker said that when the country's economic growth rate seems to be stable, the Reserve Bank will not take the risk of reducing interest rates at present.

The Reserve Bank is currently monitoring the progress of the monsoon. An analyst said that a decision on the repo rate can be taken only after getting an estimate of the status of the Kharif crop. There is a possibility of a 5 percent cut in the repo rate in October.

The repo rate has remained at 6.50 percent since April 2023. Earlier, the total repo rate was increased by 2.5 percent from May 2022. The MPC meeting of the Reserve Bank will be held between 6 and 8 August.

Let us tell you here that last week the US Federal Reserve kept the interest rates unchanged but the Bank of England cut the interest rates for the first time after a period of four years. The Federal Reserve has indicated a cut in interest rates in September.