The six-member MPC, headed by Reserve Bank of India (RBI) Governor Urjit Patel, is meeting for three days for the first time instead of the usual two days due to some administrative exigencies.
The resolution of the second bi-monthly monetary policy meeting in the current financial year, 2018-19, will be made public on Wednesday afternoon.
It was in January 2014 that RBI had last raised the short-term lending rate (repo) to 8 per cent; since then it has either reduced it or maintained status quo.
The current repo rate stands at 6 per cent.
The 7-quarter high GDP growth rate of 7.7 per cent in the January-March quarter of 2017-18 and forecast of a normal monsoon have reduced the clamour for a cut in the benchmark lending rate (repo).
Retail inflation, a key data for RBI, has remained above 4 per cent since November 2017. Besides, oil prices have been rising for the past few months. While petrol in Delhi costs Rs 77.96 a litre, diesel is at Rs 68.97 per litre.
Indicating hardening of the interest rate scenario, several major lenders including SBI, PNB and ICICI Bank have already raised their lending rates from June 1. Some of the banks have also increased the deposit rates.
In the last MPC meet, held in April, RBI Deputy Governor and member of the panel Viral Acharya had indicated that he would vote for withdrawal of monetary accommodation in the June policy.
Another member Michael Patra had voted for a hike in repo rate but was overruled by majority that opted for status-quo.
Reversing the declining trend of three months, retail inflation inched up to 4.58 per cent in April.
The Wholesale Price Index (WPI) based inflation too rose to 3.18 per cent in April mainly on account of a spike in fuel prices. PTI NKD CS SA
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