MUMBAI, June 5 Reuters India39;s central bank is widely expected to keep interest rates steady and retain its tighter monetary stance at its policy review on Friday amid robust economic growth and an uncertain inflation outlook.

However, a weakened mandate for the ruling Bharatiya Janata Partyled National Democratic Alliance has raised concerns about a potentially slower pace of fiscal consolidation alongside increased welfare spending.

Such a scenario could pose a risk to India39;s inflation and monetary policy outlooks over the medium to longerterm.

Though fiscal consolidation prospects remain intact, the pace of debt reduction could slow in the wake of the election results, Moody39;s ratings told Reuters.

All but one of 72 economists in a May 1730 Reuters poll expected India39;s Monetary Policy Committee MPC to hold the repo rate steady at 6.50 at the conclusion of its June 57 meeting. Most economists believe the 6.50 rate is the peak of the current monetary cycle.

RBI view is based on macro fundamentals. Given that inflation remains above target levels, RBI is expected to remain on pause. Strong growth conditions provide policy space to remain focused on inflation, said Gaura Sen Gupta, chief economist at IDFC First Bank.

The MPC last changed rates in February 2023, when the policy rate was hiked to 6.5. Annual retail inflation rose at a slower rate of 4.83 in April, from a gain of 4.85 in March but was still well above the MPC39;s 4 mediumterm target.

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