RBI: RBI has shown generosity amid the Russia-Ukraine dispute. The RBI is not making any changes in its interest rates, while the rest of the world’s central banks have increased their interest rates. 

New Delhi: Amidst the Russia-Ukraine war, the rate-setting panel of the Reserve Bank of India (RBI) may keep interest rates stable by showing generosity despite geopolitical risks. According to economists, RBI can improve monetary policy by the end of this year. The last meeting of the Monetary Policy Committee (MPC) was held in early February. But since then there has been a big change in the geopolitical situation. RBI will not make any immediate changes in the rates. The Russia-Ukraine war has created a ruckus in the global and domestic markets all over the world. Meanwhile, Brent crude reached $100 per barrel, raising fears of inflation.

Other central banks have increased interest rates

The monetary policy panel in India did not change policy rates in its February meeting, while global central banks have raised interest rates to combat inflation after the corona pandemic. But the policy of RBI is quite different from the central banks of other countries. RBI Governor Shaktikanta Das had said in the MPC meeting that since inflation is expected to calm down in the next financial year, there will be room for adjustment in monetary policy.

Banks estimate rate hike will be delayed

According to Barclays, ‘RBI may choose to normalize the policy corridor in the next six months. It is expected that the hike in the repo rate will start only from the Q3 2022-August meeting or it may get delayed further. According to economists at Emkay Global Financial Services, policy makers may not react immediately by way of interest rate. In the MPC meeting, the RBI indicated concrete policy. RBI may delay the hike in the repo rate by showing leniency. In fact, the global losses arising out of the Russia-Ukraine dispute have shaken the stock market to the bullion market.