MPC meet begins amid hopes of status quo on rates
RBI left the benchmark policy rate (repo) unchanged in its past four bi-monthly monetary policies
MUMBAI:The RBI’s high-powered rate setting panel, on Wednesday, began its three-day brainstorming on the next set of bi-monthly monetary policy amid expectation of continued pause on the short-term key lending rate as GDP growth is gaining momentum, and inflation manageable.
RBI left the benchmark policy rate (repo) unchanged in its past four bi-monthly monetary policies. It had last increased the repo rate in February to 6.5 per cent, thus ending the interest rate hike cycle which began in May 2022 in the aftermath of Russia-Ukraine war and subsequent disruptions in the global supply chain resulting in high inflation in the country.
RBI Governor Shaktikanta Das would unveil the decision of the six-member MPC (Monetary Policy Committee) on December 8.
RBI Governor Shaktikanta Das
On expectations from the MPC, Aditi Nayar, chief economist at ICRA said with the GDP data for the second quarter of 2023-24 appreciably higher than the MPC’s last forecast, and continuing concerns on various aspects of food inflation, “we expect the MPC to pause in its December 2023 review, amidst a fairly hawkish tone of the policy document”.
According to Deutsche Bank Research, RBI will likely increase 2023-24 GDP forecast to 6.8 per cent year-on-year, from 6.5 per cent earlier, while holding the CPI forecast unchanged at 5.4 per cent. “RBI will likely keep repo rate and stance unchanged, persist with tight liquidity and ensure that short-term rates remain around 6.85-6.90 per cent, resulting in an ‘effective rate hike’,” it said.
