Chennai, Aug 7 : The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will continue to remain cautious on the inflationary trends and may not change the repo rate, experts said on Tuesday.

Repo rate is the rate at which the RBI lends money to the banks.

However, there is a variance in their views with regard to the RBI’s stance.

Credit rating agency CARE Ratings said the MPC is expected to maintain the status quo on the policy repo rate on Thursday.

“The stance is anticipated to remain at 'withdrawal of accommodation', with the policy repo rate held at 6.5 per cent,” CARE Ratings said in a report.

This decision is primarily driven by risks to the inflationary outlook. Although the overall growth rate is expected to remain healthy, the MPC is likely to stay cautious and monitor any emerging risks to inflation.

According to CARE Ratings, despite an above-normal monsoon so far (6.4 per cent above the Long Period Average as of August 4), the overall risk of food inflation remains high due to highly uneven rainfall in the first half of the monsoon season.

Even though the Southern states have received good rainfall, key agrarian regions, particularly in North and East India, such as Punjab, Haryana, and the Eastern Gangetic Plains, continue to face double-digit deficits in rainfall, CARE Ratings said.

While Kharif sowing of food grains is 5.7 per cent higher than last year (as of August 2), it is marginally lower than the comparable period in 2022. Area sown under all major food categories -- cereals (4.5 per cent), pulses (10.9 per cent), and oilseeds (3 per cent) -- remains higher compared to the last year, CARE Ratings said.

Apart from food inflation risks, the recent hikes in telecom tariffs by major mobile service providers, ranging from 10-25 per cent, will put upside pressures on core inflation.