RBI Monetary Policy Committee (MPC) Meeting: The RBI Monetary Policy Committee (MPC) is set to kick start its 3-day meeting deliberating interest rates and analysing the state of the economy on April 3 and will end on April 5. This will be the first meeting of the RBI MPC after the new financial year FY2025 kick starts from April 1 and the second meeting of 2024 after the February Policy meeting held between February 6-8. While most of the street expects status quo on rates, many economic observers will watch out for RBI’s tone given the spike in recent GDP numbers.
RBI Monetary Policy Meeting Schedule
RBI Monetary Policy will meet between April 3-5 and RBI will announce its decision on interest rates at 10 am on April 5. The Monetary Policy Committee invariably meets for 3 days before announcing its decision at the end of the 3-day period. The next RBI MPC meeting is scheduled on June 5. The MPC is required to meet at least four times in a year.
Meet the RBI MPC members
According to the Section 45ZB of the amended RBI Act, 1934, the six-member monetary policy committee (MPC) is constituted by the Govt. The present committee was constituted on October 5, 2020 and comprises of –
1. Chairperson: Reserve Bank of India Governor
2. Member: Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy
3. Member: 1 Reserve Bank of India officer nominated by the Central Board
4. Member: Prof. Ashima Goyal, Professor, Indira Gandhi Institute of Development Research
5. Member: Prof. Jayanth R. Varma, Professor, Indian Institute of Management, Ahmedabad
6. Member: Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research, Delhi
Every member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
What’s the RBI MPC’s role?
The MPC or Monetary Policy Committee of RBI determines the policy repo rate required to achieve the inflation target and also keeps a watch on the liquidity condition and overall state of the economy.
What’s the expectation from RBI MPC?
The expectation across the street is that RBI is probably going to keep rates unchanged at 6.50 per cent. Earlier in the February Policy, RBI’s MPC had decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. Addingits assessment of the economy, RBI stated that “MPC will carefully monitor any signs of generalisation of food price pressures to non-food prices which can fritter away the gains in the easing of core inflation.”
It further added, “Monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission. The MPC will remain resolute in its commitment to aligning inflation to the target. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.”
Just to remind our readers, core inflation eased to 3.34 per cent in Feb Vs 3.59 per cent in January. Headline CPI inflation remained however unchanged in February at 5.09 per cent Vs 5.1 per cent in January.
UBS in an earlier report in March had stated that there doesn’t seem to be any urgency for immediate rate cut. Tanvee Gupta Jain, Economist at UBS India had pointed out that, “We think there is no urgency for the MPC to change policy settings (rates and stance) in the April policy. We expect the shift in policy stance to “neutral” to likely happen in the June policy.”