Delhi: Indian stock indices traded marginally higher on Wednesday morning but the investors’ focus remains on the Reserve Bank of India’s (RBI) decision at the ongoing bi-monthly monetary policy review.
Benchmark Sensex and Nifty traded 0.3 per cent higher each at the time of writing this report.
Investors are waiting for the policy outcome of the meeting, headed by RBI governor Shaktikanta Das, to be announced Thursday morning.
A majority of analysts expect the RBI will continue to keep the repo rate unchanged at 6.5 per cent.
A consistent decline in inflation (currently at an 18-month low) and its potential for further decline may prompt the central bank to put the brake on the rate again.
RBI’s consistent monetary policy tightening since mid-2022 could be attributed to the substantial decline in inflation numbers in the country.
The RBI in its April meeting paused the repo rate.
Barring the April pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Besides putting a brake on the interest, the RBI may also give a fresh outlook on growth and inflation 2023-24 after GDP numbers for 2022-23 came above estimated figures.
As per the provisional estimates released by the National Statistical Office (NSO) recently, real GDP growth for 2022-23 stood at 7.2 per cent, higher than the 7 per cent projected.