A crucial meeting
Headed by Governor Shaktikanta Das, a meeting of the Monetary Policy Committee (MPC) is scheduled from June 6 and its decision would be announced on June 8.
After the last MPC meeting in April, the RBI paused its rate hike cycle and stayed with the 6.5% repo rate. Prior to that the central bank had cumulatively hiked the repo rate by 250 basis points since May 2022 in a bid to contain inflation.
What it means
Repo rate is the rate at which the central bank of a country (In India’s case it’s the RBI) lends money to commercial banks. It is a tool to control flow of credit in an economy and, thus, control inflation.
Keeping the repo rate unchanged should ideally translate to demand in the economy growing at the current pace and contributing to growth.
The inflation scene
Chief Economic Adviser V Anantha Nageswaran on May 31 said inflation in India is expected to ease to 5% in 2023-24.
But…
There is a bigger concern. India’s unemployment rate climbed to a four-month high of 8.11% in April — from 7.80% in March.
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