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Fuel Prices To Weigh On MPC's Rate Determination Decision

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Fuel prices is said to be a prime factor to weigh in the decision of MPC members in its June bi-monthly policy meet which this time around is scheduled for three days instead of the usual two days. The meet is scheduled to begin on June 4 and the three day long schedule is owed to "administrative exigencies".

Fuel Prices To Weigh On MPC's Rate Determination Decision
 

In a statement issued by the RBI on Tuesday, the central bank said, "The MPC will meet on June 4-6, 2018 for the Second Bi-monthly Monetary Policy Statement for 2018-19. The resolution of the MPC will be placed on the website at 2.30 pm on June 6, 2018".

The factors that will weigh on the key policy rate decision will be rising crude oil price and inflation which for the month of April increased to 3.18%. Though the panel looks in primarily at retail inflation measured in terms of CPI or consumer price index, the surge in oil prices can boost inflationary concerns.

The repo rate at the previous first meet for the financial year 2018-19 maintained status quo with 6% rate. And majority of the members flagged risks to inflation with an upside.

Before, the MPC committee was set-up, the RBI governor was the sole entity vested with the power to determine key economic rate.

And in view of the inflationary pressure due to surging oil prices globally, RBI may well increase the interest rates higher by 25 basis points. 1 basis point is one-hundredth of a percentage point.

Goodreturns.in

Story first published: Wednesday, May 30, 2018, 11:08 [IST]
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