RBI Monetary Policy Committee Meeting Highlights: The RBI’s Monetary Policy announced its decision on February 8 keeping the repo rate remain unchanged at 6.5 per cent after having raised it by 250 basis points between May 2022 and February 2023. RBI Governor Shaktikanta Das said “India’s potential growth is propelled by structural drivers.” He also mentioned that increasing geopolitical tension impacting supply chain and putting pressure on commodity prices especially crude oil.
Devendra Kumar Pant
Chief Economist and Head (Public Finance) of India Ratings & Research
“We expect RBI to maintain status quo on policy rates in February 2024 monetary policy. Ind-Ra notes that the liquidity situation is tight and weighted average call money rate (WACR) is hovering around upper end of the LAF corridor suggesting tighter liquidity conditions. The liquidity conditions in March 2024, especially second fortnight are likely to remain tight due to advance tax/GST outflows. While the tighter liquidity condition has some argument for some easing, expectations of inflation remaining higher than RBI’s target of 4% suggests the cautious approach to be followed by the RBI. Even if inflation trajectory remains in line with RBIs expectations, the RBI may hold policy rates at least in next couple of MPC meetings.”