RBI's Monetary Policy Committee headed by RBI Governor Urjit Patel, began its 3-day meeting in Mumbai today.

Due to certain administrative exigencies, the six member committee is meeting for three days instead of the usual two days. The second bi-monthly monetary policy will be announced on Wednesday.

Despite higher GDP growth rate of 7.7 percent in the January-March quarter and the forecast of a normal monsoon, many experts believe that RBI is likely to announce an interest rate hike due to rising crude prices and higher inflation.

Some other experts believe that RBI may maintain status quo on interest rates for the fifth consecutive time since August last year but will certainly change its stance from ‘neutral’ to ‘withdrawal of accommodation’.

The last rate hike was announced in January 2014 when the short-term lending rate or repo rate was increased to 8 percent. Since then, RBI has either reduced the rate or maintained status quo. The current repo rate stands at 6 percent.

Meanwhile, the benchmark index at the Bombay Stock Exchange skidded by 215 points to close the day at 35,012 amid expectations of a rate hike. Even though the Sensex had opened on a strong note amid positive global leads, it soon slipped into the negative zone on massive selling. The broader NIFTY too declined by 68 points to close at 10,628.