The RBI is holding its Monetary Policy Committee (MPC) meeting from today. The MPC meeting will end on Friday, this week, and the central bank will decide its upcoming roadmap for the country's economic policy. The MPC meeting is happening at a time when the global picture is highly occupied with the Russia-Ukraine geopolitical tensions, high fuel prices due to crude oil price hikes in the global markets, and most importantly rising inflation. Indian citizens are shrinking their purchasing capacities due to the high inflation rate, hence demands are slowing down.
The RBI is much concerned about the current inflationary pressure in India. In February, the annual inflation rate increased to 6.07%, the highest rate since June 2021. The RBI earlier targeted to bind the inflation rate within the comfort zone of 2-6%. However, the global scenario regarding inflation is even worse. The USA is dealing with a 40 years high inflation rate. But, in India, the central bank might try to table a monetary policy that will push the economic growth higher while keeping inflation under check. Hence, analysts are having mixed opinions; the RBI may or may not tighten the monetary policy of the country to control inflation. The interest rate hike by the central bank is only anticipation now, the RBI can also maintain the status quo to boost the economic growth at present.
Vivek Bajaj, Cofounder of StockEdge & Elearnmarkets told the media, "With the start of the new fiscal year, investors will be closely watching the MPC's monetary policy, which is scheduled for April 8 after a two-day examination, in between the concerns about rising inflation mainly due to increasing crude oil and other commodity prices. Even though active Covid-19 cases have dropped dramatically across the country, commodity prices, particularly crude oil, have risen due to the uncertainty created by the Russia-Ukraine conflict."
Bajaj added, "The market will be volatile as the RBI monetary policy will be reviewed this week. The tensions between Ukraine and Russia and the rise in crude and commodity markets will be the key indicators to look for this week for trading. However, long-term investors shouldn't worry as this is a temporary situation and the market's primary trend remains bullish."