RBI MPC Meeting Oct 2024: The Reserve Bank of India’s 51st monetary policy meeting led by Governor Shaktikanta Das kept rates unchanged. Governor Das said flexible inflation targeting framework has helped bring about price stability globally . The RBI has changed its stance to Neutral and the focus remains unambiguously on INFLATION.
The MPC changed its stance in sync with the Geopolitical conditions and the global growth challenges. Keeping in view the prevailing inflation and growth condition, the RBI remains unambiguously focused on inflation and the alignment to the MPC targets. Earlier this month, the Centre had appointed three new members to the RBI’s monetary policy panel.
RBI Governor Shaktikanta Das said that Indian rupee continues to be the least volatile among other currencies.
“During the current financial year (up to October 8), the exchange rate of the Indian rupee (INR) remained largely range-bound. The INR also continued to be the least volatile among peer EME currencies. This was so even during the high volatility episode, following the unwinding of yen carry trade in early August 2024. The lower volatility of the INR reflects India’s strong macroeconomic fundamentals and improved external sector outlook,” he said.
RBI Governor Shaktikanta Das announced that the FY25 inflation is projected at 4.5%. He said that a recent increase in food and metal prices, if sustained, could contribute to the upward risks of Consumer Price Index (CPI) inflation.
Q2 inflation forecast: 4.1%
Q3 inflation forecast: 4.8%
Q4 inflation forecast: 4.2%
Q1FY26 inflation forecast: 4.3%
RBI Governor Shaktikanta Das announced that the GDP growth estimates for FY25 is forecasted at 7.2%.
Here are quarterly GDP growth estimates:
Q2FY25: 7% from 7.2%
Q3FY25: 7.4% from 7.3%
Q4FY25: 7.4% from 7.2%
Q1FY26: 7.3% from 7.2%
Inflation projected at 4.5% for FY25
GDP projected at 7.2% for FY25
RBI Governor Shaktikanta Das said that domestic growth has sustained its momentum, and the global economy has remained resilient since the last MPC meeting. However, downside risks persist due to geopolitical conflicts, financial market volatility, and elevated public debt. On a positive note, world trade is showing signs of improvement.
Shaktikanta Das announced that the RBI MPC, while maintaining status quo on policy rates, changed the stance to ‘neutral’ from ‘withdrawal of accomodation’.
At the end of the three-day MPC meet, RBI Governor Shaktikanta Das today announced that the six-member panel has decided, with a majority vote of 5 out of 6 members, to keep the interest rate unchanged at 6.50 per cent, and to change the policy stance of ‘neutral’.
RBI Governor Shaktikanta Das started his speech and will soon announce the decision by the monetary policy committee on the benchmark interest rate. The RBI MPC met for a three-day deliberations on the repo rate on September 7 and today marks the end of the meeting.
The Centre determines the inflation target in consultation with the RBI, in terms of the Consumer Price Index (CPI) once in five years. In 2016, the Centre had set the CPI inflation target of 4 per cent till March 2021 (with an upper tolerance limit of 6 per cent and a lower tolerance limit of 2 per cent). This target was retained and will now be the goal till March 2026.
An analysis report by JM Financial stated, “The policy decision in the MPC meet would be influenced by the on-going geopolitical tensions and its likely (inflationary) impact on the crude oil prices and deterioration in trade balance. Substantial improvement in domestic liquidity reflected in the call money rates easing 40bps to 6.1% in Oct’24. The strength in the FII flows (USD 6.2Bn) post Fed’s rate cut in Sep’24 was overshadowed by the recent escalation in geopolitical tensions, leading to an outflow of USD 2.5Bn during 1-3 rd Oct. Considering the constant dissent of the outgoing members, markets would be closely monitoring the changes in the MPC’s views due to the induction of three external members. Amidst minor tweaking in growth and inflation forecast, we don’t expect premature rate cuts but the MPC may prepare the markets for policy easing with a change in policy stance to ‘neutral’.”
India’s wholesale price index (WPI)-based inflation for August softened to 1.31 per cent in comparison to 2.04 per cent in July, showed the provisional data released by the Ministry of Commerce & Industry. This was due to a reduction in the prices of manufactured products and food items. “Positive rate of inflation in August, 2024 is primarily due to increase in prices of food articles, processed food products, other manufacturing, manufacture of textiles and manufacture of machinery & equipment, etc.,” Ministry of Commerce & Industry said in a statement.
The RBI had, in the last quarter of FY23, on February 8, increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.50 per cent.
India’s retail inflation, based on the Consumer Price Index (CPI), inched up to 3.65% in August from 3.6% the previous month. This was due to an increase in cereal prices, and a slightly lower base compared with the one for July. In August 2023, retail inflation stood at 6.83%. July 2024 witnessed CPI inflation at a 59-month low of 3.6%, as a high base effect depressed the YoY inflation print.
Rahul Bajoria, India and ASEAN Economist at Bank Of America, said, “RBI is set to remain on hold, for the tenth consecutive MPC, keeping repo rate at 6.50%. The guidance from RBI for near term growth and inflation dynamics remains upbeat, and that rules out any material risk of a change in monetary policy guidance in the upcoming October MPC meeting. Governor Shaktikanta Das in his recent speeches has been categorically pushing back on any near-term turn, disassociating RBI’s monetary policy from the US rate cuts, and talking up future growth prospects. This was further corroborated in the recent RBI bulletin, where RBI staff estimates show no growth slippage, and inflation being broadly on track to meet RBI’s growth and inflation projections of 7.2% and 4.5% for FY25, respectively.”
Before June, the MPC had met in April to assess the macroeconomic situation and decided not to hike the country’s repo rate. The RBI MPC, with a 5:1 majority, maintained the withdrawal of accommodation stance. The RBI had also stated the real GDP growth projection for FY24 was at 6.5 per cent. However, fears of sustained core inflation remain persistent on weather-related vagaries, OPEC+’s surprise announcement and rising commodity prices.
After the June 2023 meeting, RBI Governor Shaktikanta Das had said that the MPC has decided to keep the key policy repo rate unchanged at 6.5 percent. “MPC also decided by a majority of five out of 6 members to remain focused on withdrawal of accommodation to ensure inflation aligns with the target while supporting growth,” RBI Governor Shaktikanta Das had said. He also said that the standing deposit facility rate remained at 6.25 per cent, and marginal standing facility rate and bank rate remained unchanged at 6.75 per cent.
During the August meeting, the RBI MPC had decided to keep the key policy repo rate unchanged at 6.5 per cent, maintaining status quo for the third time in a row. The MPC voted in 5:1 majority to maintain the ‘withdrawal of accommodation’ stance to ensure that inflation progressively aligns with the target, while supporting growth, Shaktikanta Das had said during his speech. “Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent,” he had added.
Before December, the RBI MPC meeting was held on October 4-6. At the end of the 3-day meeting, the central bank had decided to keep the key policy repo rate unchanged at 6.5 percent, maintaining the status quo for the fourth time in a row. The MPC decided by a majority of 5 out of 6 members to remain focussed at withdrawal of accommodation to ensure inflation aligns to the target by supporting growth.
At the end of its December meeting, the RBI MPC had announced its decision to keep the repo rate unchanged at 6.50 per cent. “The Reserve Bank of India’s Monetary Policy Committee after a detailed assessment of the evolving macroeconomic developments, has decided unanimously to keep the repo rate unchanged at 6.5 per cent,” RBI Governor Shaktikanta Das had said. This was the fifth meeting wherein the MPC decided to maintain the status quo on the repo rate.
Governor Das had said that FY24 real GDP growth was projected at 7 per cent. Real GDP growth for the next year was projected at 6.7 per cent in Q1, 6.5 in Q2 and 6.4 in Q3.
The MPC, before the April meeting, had met on February 6-8 and the central bank had decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. Governor Shaktikanta Das had announced that the committee had decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. “These decisions are in consonance with the objective of achieving the medium- term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” Das had said.
At the end of its three-day deliberations after the April 2024 meeting, the RBI MPC unanimously decided to keep the key interest rates unchanged at 6.50 per cent. The policy stance was also maintained at ‘withdrawal of accommodation’. RBI Governor Shaktikanta Das had said that the GDP growth forecast for FY25 was at 7 per cent. The quarterly projections are– Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7 per cent and Q4 at 7 per cent.
Before August, the RBI MPC meeting was held between June 5-7. After the June meeting, the RBI Governor had announced that the MPC decided to keep the repo rate unchanged at 6.5 per cent for the eight consecutive time by a 4:2 majority. RBI raised its GDP growth forecast for FY25 to 7.2 per cent from 7 per cent earlier, while retaining the FY25 inflation forecast at 4.5 per cent.
The third bi-monthly RBI MPC meeting for FY25 was held between August 6-8 and at the end of the 3-days deliberation, the central bank kept the benchmark interest rate unchanged at 6.50 per cent. RBI Governor Shaktikanta Das had announced that the MPC decided to maintain the policy stance of ‘withdrawal of accommodation’. The MPC had voted by a 4 to 2 majority to keep the policy rate unchanged. RBI retained real GDP growth estimates for FY25 at 7.2 per cent, and CPI inflation projection at 4.5 per cent.
April 3-5, 2024
June 5-7, 2024
August 6-8, 2024
October 7-9, 2024
December 4-6, 2024
February 5-7, 2025
The monetary policy committee of the RBI determines the policy repo rate which is required to achieve the inflation target, while also keeping a watch on the liquidity condition and overall state of the economy. This is the fourth MPC meeting for the financial year 2024-25, which started on September 7. The body was constituted in 2016 and is required to meet at least four times a year.
The panel headed by RBI Governor Shaktikanta Das has three external members who hold office for a period of four years and are routinely nominated and appointed by the central government. Earlier this month, the Centre had appointed three new members to the monetary policy panel. The new members are Saugata Bhattacharya, Economist; Dr Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development; and Professor Ram Singh, Director, Delhi School of Economics, University of Delhi.
The new members joined internal members which include Chairperson Shaktikanta Das, RBI Deputy Governor in charge of monetary policy Michael Debabrata Patra and Executive Director monetary policy department of RBI Rajiv Ranjan.
The Monetary Policy Committee (MPC) meeting led by RBI Governor Shaktikanta Das is ending today and the decision will be announced at 10:00 am. The RBI governor will deliver his speech this morning at 10:00 am and one can watch this on the official YouTube channel of RBI.
According to economists, the RBI MPC will remain focussed on ‘withdrawal of accommodation’ to ensure inflation ultimately aligns with the RBI target. The repo rate will be kept unchanged at 6.50%. The RBI has raised the repo rate by 250 basis points (bps) since May 2022.
With the RBI MPC meeting ending today and Governor Shaktikanta Das all set to announce the decision of the policy committee, FinancialExpress.com is all set and ready and awaiting the announcement and are continuously bringing the updates on the repo rate, factors that may or may not have affected the deliberations at the 3-days meetings, state of Indian economy, and much more, through this live blog. Stay tuned.