Reserve Bank of India Governor Shaktikanta Das is set to announce the bi-monthly policy on Thursday amid expectations of maintaining the status quo on the key interest rate due to inflation nearing the upper tolerance level of 6 per cent.
Over the past year, the Reserve Bank has kept the repo rate steady at 6.5 per cent, last raising it in February 2023 from 6.25 per cent. This was done to counter inflation, primarily fueled by global factors.
While retail inflation has seen a decline since reaching its peak of 7.44 per cent in July 2023, it remains elevated at 5.69 per cent as of December 2023, albeit within the Reserve Bank’s comfort zone of 4-6 per cent. The Monetary Policy Committee (MPC), headed by Governor Das, began its three-day deliberations on Tuesday.
When and where can you watch the MPC announcement?
The Reserve Bank of India’s Monetary Policy Committee (MPC) convened on February 6 and concluded its meeting on February 8. RBI Governor Shaktikanta Das is scheduled to announce the MPC’s decision at 10 am on February 8.
The live stream of the RBI Governor’s policy statement will be available on the RBI’s YouTube channel or the RBI’s official X (formerly Twitter) handle.
What happened in the previous meeting?
In the previous MPC meeting held on December 8, the RBI opted to maintain the key rates unchanged for the fifth consecutive time. The committee, comprising three RBI members and three external members, unanimously voted to retain the benchmark repurchase rate of 6.5 per cent. Anticipating quicker growth in the world’s fastest-growing major economy, the MPC acknowledged an uncertain inflation outlook ahead of the elections.
The majority of panel members advocated for keeping the policy stance at “withdrawal of accommodation,” implying that rates may remain elevated for an extended duration. Governor Das raised the economic growth forecast to 7 per cent from 6.5 per cent, citing encouraging signs such as expanding manufacturing PMI and robust growth in eight core industries.
However, concerns linger over uncertain food prices, particularly elevated global sugar prices, which could impact inflation. Governor Das emphasised that “over-tightening” could pose growth risks to the economy but clarified that it doesn’t signify a shift towards a neutral policy stance.
Additional measures announced included allowing banks and money market participants to make balance adjustments to the Marginal Standing Facility (MSF) and the Standing Deposit Facility (SDF) on holidays and weekends. This move aims to normalise liquidity fluctuations and prevent excessive volatility in short-term rates.
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