RBI governor to announce repo rate today. What happened in last MPC meet?
The Reserve Bank of India governor Shaktikanta Das will announce the bi-monthly policy on Thursday, with experts anticipating a status quo on the key interest rate due to inflation hovering close to the upper tolerance level of 6 per cent.
For the past year, the Reserve Bank has maintained the repo rate at 6.5 per cent, having last increased it in February 2023 from 6.25 per cent to 6.5 per cent to curb inflation primarily driven by global factors.
While retail inflation in the current financial year has seen a decline since 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), led by governor Das, commenced its three-day deliberations on Tuesday.
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What happened in the last MPC meet? Top points
• In the last MPC meeting on December 8, the RBI kept the key rates unchanged for the fifth consecutive time.
• The Monetary Policy Committee, consisting of three RBI and three external members, voted unanimously to maintain the benchmark repurchase rate at 6.5 per cent.
• MPC anticipated faster growth in the world’s fastest-growing major economy, considering an uncertain inflation outlook ahead of elections.
• All panel members, except one, voted to keep the policy stance at “withdrawal of accommodation,” suggesting that rates may remain higher for an extended period.
• The central bank raised its economic growth forecast to 7 per cent from 6.5 per cent.
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• Encouraging signs, such as an expanding manufacturing PMI and robust growth in eight core industries, bolster confidence in sustained and robust economic growth, governor Das said.
• Inflation outlook hinges on uncertain food prices, with elevated global sugar prices being a cause for concern, said Shaktikanta Das.
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• Governor Das added that “over-tightening” can pose growth risks to the economy, clarifying that it doesn’t signal a shift toward a neutral policy stance.
• Additional measures included allowing banks and money market participants to make balance adjustments to the MSF and SDF on holidays and weekends, aiming to normalise liquidity swings and prevent excessive volatility in short-term rates.
