April 6 policy, a close call

If RBI goes for a hike, it could change the stance from withdrawal of accommodation to neutral, signalling end of cycle. If not, the stance can remain unchanged as tight liquidity will serve purpose

Since the first rate hike of the current cycle that started in early May 2022, the first monetary policy of FY24 this week will probably be Reserve Bank of India (RBI) Governor Shaktikanta Das’s toughest.

In May last year, the Indian central bank had raised its policy rate by 40 basis points (bps) in an off-cycle meeting of the Monetary Policy Committee (MPC), its rate-setting body, to fight rising inflation that had remained above the upper band of its flexible target since January 2022. One bps is a hundredth of a percentage point.

Exactly two years before this, in May