By Admin 
RBI MPC Meeting: The Monetary Policy Committee (MPC) of RBI is going to meet today i.e. from 4th to 6th February. It is expected that this time the Reserve Bank will not make any change in the repo rate. Economists also say that the committee will maintain a neutral stance, due to which the monetary situation will remain stable.
Experts’ opinion on repo rate cut
Madan Sabnavis, Chief Economist of Bank of Baroda, has said, “A new series of CPI and GDP is going to be released this month, in which inflation and GDP growth may be higher than the current level, hence it seems that there will be no change in MPC rates.
Brokerage house Bank of America (BofA) also believes something similar. According to the growth outlook, there is less need for further reduction in repo rate by RBI MPC. There was certainly scope for a rate cut to support growth, but this depended on the trade deal between India and the US, which remained a major source of uncertainty for the growth outlook. Now that the deal has been done and this deal will increase the certainty of growth, the possibility of a rate cut may be less.
This is the reason why BofA has currently changed the possibility of cutting the repo rate by 25 basis points to ‘Hold’ instead of ‘CALL’. BofA also said, “We believe that the RBI will now stop cutting rates, but will continue to carefully manage its liquidity system to ensure that rate transmission remains active.”
When does the repo rate reduce?
RBI reduces repo rate to support economic growth. If the repo rate decreases, the interest rates on the loan decrease. This encourages investment, increases liquidity in the system and accelerates economic activities. This time the possibility of reducing the repo rate is less because at present the country’s GDP growth (7.3 percent) is good, the economy has also got some relief from the trade deal, inflation is under control, hence it is expected that RBI will not make any change in the repo rate.
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